Minimum support price policy is one of the most important agriculture price poli
ID: 1212730 • Letter: M
Question
Minimum support price policy is one of the most important agriculture price policy tools in India. Which of the following is true of this policy?
Minimum support price policy is one of the most important agriculture price policy tools in India. Which of the following is true of this policy?
A) The government announces prices just a week before harvest
B) Producers can react to the price information
C) The policy has an effect of decreasing and discouraging production
D) If the market price falls below this price, food processing companies enter into the market and buy the grain at the cheapest possible price
Minimum support price policy is one of the most important agriculture price policy tools in India. Which of the following is true of this policy?
A) The government announces prices just a week before harvest
B) Producers can react to the price information
C) The policy has an effect of decreasing and discouraging production
D) If the market price falls below this price, food processing companies enter into the market and buy the grain at the cheapest possible price
Explanation / Answer
Out of the available options, option a, c and d are clearly incorrect. MSP is announced at the beginning of the sowing season to encourage prouduction and if the market price falls below the MSP in the event of bumper harvest, government agencies purchase the surplus at that MSP. Producers can definitely react to the MSP and can have their terms over the determination of MSP
Hence option B is correct