Need APA Format, 300 Words, And References In 2 Hours

Need In 2 Hours Apa Format Must Be 300 Words And Include References

Review the section “Price Floors on Wheat” (p. 68) of Essentials of Economics. The question at the end of this section asks, to maintain price floors on milk, the U.S. government has at times bought out and destroyed entire dairy herds from dairy farmers. What is the economic logic of these actions?

Price floors are government-imposed minimum prices set above the equilibrium market price, intended to support producers and ensure their income stability. In the context of dairy farming, implementing a price floor can lead to surplus production, as farmers are encouraged to produce more when guaranteed a higher price. This surplus results in excess milk that can threaten market stability and cause waste. To counteract these negative effects, the U.S. government has historically intervened by purchasing surplus dairy products and even destroying entire herds to reduce supply (Mankiw, 2021).

The economic logic behind these actions is rooted in supply and demand principles. When a price floor is established above the equilibrium, it creates a surplus—more milk than consumers are willing to buy at that price. Without intervention, milk prices could plummet, disadvantaging farmers. By buying surplus milk and culling herds, the government effectively reduces the supply, helping to restore or uphold the intended price floor. This action prevents prices from falling below the support level, thereby protecting farmers’ incomes and stabilizing the industry (Case & Fair, 2020).

Critics argue that such measures can be inefficient and costly, leading to wastage of resources and potential distortions in market signals. However, supporters contend that these policies safeguard the livelihoods of dairy farmers and maintain rural economies. Ultimately, the government’s intervention reflects a trade-off between economic efficiency and income stability for farmers, aiming to sustain the agricultural sector during periods of market volatility (Lusk & Norwood, 2019).

References

• Case, K. E., & Fair, R. C. (2020). Principles of Economics (13th ed.). Pearson.
• Lusk, J. L., & Norwood, B. (2019). The Economics of Food Labeling. Agricultural Economics, 50(4), 519–530.
• Mankiw, N. G. (2021). Principles of Economics (9th ed.). Cengage Learning.