A government payment to producers for the difference between a target price and the price at which producers were able to sell their goods is known as a:
A)subsidy.
B)deficiency payment.
C)producer surplus.
D)price support.

Question

A government payment to producers for the difference between a target price and the price at which producers were able to sell their goods is known as a:
A)​subsidy.
B)​deficiency payment.
C)​producer surplus.
D)​price support.

Quizplus · Accepted Answer

A deficiency payment is a government payment made to producers to cover the difference between the target price (the price the government wants the product to sell at) and the actual market price. This ensures that farmers still receive a certain level of income even if market prices are low. Deficiency payments are a form of price support. A subsidy is a general term for any type of government support to a particular industry or group. Producer surplus is the difference between the market price and the minimum price that producers are willing to accept to produce a good or service.

A Government Payment to Producers for the Difference Between a Target