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OLEGan [10]
3 years ago
8

Explain how a Target price for farm crops is an example of a price floor.​

Business
1 answer:
12345 [234]3 years ago
8 0

Answer: A target price for farm crops is an example of price floor because it’s fixed ahead of harvests with the interest of farmers in mind.

Explanation: A quick definition of both concepts would be of help. A price floor is usually fixed by government legislation and it ensures that the price of a commodity or service does not fall below a certain minimum. In the case of farm crops, a floor price makes sure that the farmers are guaranteed a level of profit in case there is poor harvest for any reason whatsoever. The price floor must be fixed above the equilibrium price for this to be effective.

A target price is an expectation of the future price of commodities or services, and hence prices are fixed ahead of the harvest in the case of farm crops. This is so because as explained earlier, future conditions might change and become unfavorable, therefore making the current market price unprofitable for farmers. If for example, a sack of potatoes currently sells for $30, the government may fix the price floor ahead of the harvest season at $45 per sack. This implies that after harvesting farmers can still sell at $30. However if the harvest turns out to be bad perhaps due to natural disasters, pests or fungal attacks, etc, then the farmers can go ahead and sell at $45 and possibly higher. No farmer is allowed to sell below $45 (since that is the ‘floor’). That way, farmers would still have some profit guaranteed and would be encouraged to remain in the farming business.

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Answer:

Myles Manufacturing Company

Cost of Goods Sold = $2,700,000

Explanation:

Cost of Goods Sold:

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3 0
3 years ago
A modified DCF analysis is best for evaluating and selecting the optimal strategic alternative when a company has ___ goal(s) an
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The net income or net loss would reflect in the statement of the retained earning account.

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The journal entry is shown below:

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Answer:

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the inability of government policy to affect demand.

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Government has every right to make policies that would strictly affect price, if this is not done and there is inflation of price it would lead to recession.

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