Acreage limitations are used by the government because
A) they induce less deadweight loss than cash transfers to farmers.
B) they raise the market price of an agricultural product without the surpluses associated with price supports.
C) the government wishes to lower agricultural prices.
D) they are an effective way to feed poor people.

Question

Quizplus · Accepted Answer

Acreage limitations raise the market price of an agricultural product without the surpluses associated with price supports. This helps the government to avoid the deadweight loss and other economic inefficiencies associated with price supports while still providing support to farmers. Acreage limitations are not used primarily to lower agricultural prices or to feed poor people.

Acreage Limitations Are Used by the Government Because