The only peak weve reached is how much Gov subsidy were willing to put up with in the farming industry. If you want to see want the actual peak production of farming is, remove the farm bill. Economics is the ultimate regulator of industries. Without Gov intervention, I think you'd find we produce way less than ultimate yield because the market wont support current production rates.
The only peak weve reached is how much Gov subsidy were willing to put up with in the farming industry. If you want to see want the actual peak production of farming is, remove the farm bill. Economics is the ultimate regulator of industries. Without Gov intervention, I think you'd find we produce way less than ultimate yield because the market wont support current production rates.
I recently read that without the milk price supports being renewed, milk would be about $6.40/gal. here, or about $2.10 more than with the support. I bet that would slow down milk sales.
ECON 101 POP QUIZ
Suppose Congress fails to enact a new farm bill and a milk price support from 1949 legislation goes into effect, raising the retail price of fluid milk from $4.30/gallon to $6.40/gallon. Assume that the own-price elasticity of demand for fluid milk at the retail level is -0.32 (http://ageconsearch.umn.edu/bitstream/21679/1/sp99ma02.pdf)
1. If the retail price of milk increases, consumer expenditures on milk will (circle one)
(a) increase
(b) decrease
(c) stay the same
2. Compute the expected percentage change in retail fluid milk quantity sold if the retail price increases from $4.30/gallon to $6.40/gallon.
Steve