- Which of these is an example of the line, marked “Artificial Price?”
- Farm subsidies
- Market price
- Minimum wage
- Rent controls
Artificial price.
Artificial price is the current or future prices in the market affected by manipulation and is high or lower than supply and demand forces would have reflected. It is the price that has been deliberately made or retained and fails to indicate the actual demand-supply effects accurately. The prices may not require market dominance, though they may result from them.
The answer.
- Farm subsidies. These are financial benefits from the United States government to agribusiness to reduce risks farmers face, and the risks create by the disrupted demand. Some of the crops that the government subsidies are wheat, soybeans, corn, rice, and cotton.
These government incentives supplement the farmer’s incomes and influence the supply and the prices of the produce. Given that the costs of these products get influenced, then farm subsidies are artificial prices. The products that get produced by farmers who can access the farm subsidies and benefit from this incentive have their costs and demand and supply influenced. They do not face the natural forces of demand and supply. They are deliberately maintained and created for this effect, and given the fact that they miss this authentic influence of demand and supply. Then the incentive is an artificial price.