ENTREPRENEURSHIP

Detailed explanation-1: -What is the government doing when it buys wheat to keep the price high enough for farmers to make a profit? regulating monopolies.

Detailed explanation-2: -The Price Support Policy of the Government is directed at providing insurance to agricultural producers against any sharp fall in farm prices. The minimum guaranteed prices are fixed to set a floor below which market prices cannot fall.

Detailed explanation-3: -Agricultural price support program is an example of price floor. Under agriculture price floors, a minimum allowable price set above the equilibrium price is a price floor. With a price floor, the government forbids a price below the minimum.

Detailed explanation-4: -Price regulation is the policy of setting ‘price’ of a commodity or service by the government or any regulatory body with the objective of protecting the ‘producers’ or the ‘consumers’. A deviation from the equilibrium price causes the problem of ‘overproduction’ or ‘underproduction’.

Detailed explanation-5: -In order to protect the interest of consumers government fixes the maximum price of the commodity. This maximum price is generally lower than the equilibrium price. This is called control price or ceiling price.