what is support price ? How does it affect the producers
Answers
Answer:
In economics, a price support may be either a subsidy, a production quota, or a price control, each with the intended effect of keeping the market price of a good higher than the competitive equilibrium level.
In the case of a price control, a price support is the minimum legal price a seller may charge, typically placed above equilibrium. It is the support of certain price levels at or above market values by the government.
A price support scheme can also be an agreement set in order by the government, where the government agrees to purchase the surplus of at a minimum price. For example, if a price floor were set in place for agricultural wheat commodities, the government would be forced to purchase the resulting surplus from the wheat farmers (thereby subsidizing the farmers) and store
Answer :
Support price policy is the price that intends to give subsidy or control the price of a commodity. The government usually offers support price to farmers for selling their agricultural produce. It saves the farmers from getting exploited and offers them adequate consideration.
Explanation:
Price is what the producer receives for selling one unit of a good or service. An increase in price almost always leads to an increase in the quantity supplied of that good or service, while a decrease in price will decrease the quantity supplied.
Producer surplus is affected by changes in price, the demand and supply curve, and the price elasticity of supply.