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    Farm Subsidies Programs Paper

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    The theory of market economies emphasizes freedom of choice and limited government intervention. The classic argument for government intervention is market failure - the inability of the market economy to correct itself from a dysfunctional state (such as the Great Depression).
    Examine one case of significant government intervention as it relates to your current industry of employment or an industry in which you are interested in working. Examples of intervention programs include, but are not limited to:
    • US agriculture support programs
    • Low income support programs (Food Stamps, Earned Income Tax Credit, Child Tax Credit, and Temporary Assistance to Needy Families)
    • Medicaid, Children's Health Insurance Program, Obamacare
    • Low income rent controls and housing vouchers
    • Government promoting renewable energy sources, discouraging fossil fuel sources
    Develop a 16-slide presentation including detailed speaker notes or voiceover including the following:
    • Describe the intervention and detail its history.
    • Analyze the arguments for government intervention as opposed to arguments for market-based solutions.
    • Examine who may be helped and who may be hurt by the selected government intervention.
    • Examine externalities and/or unintended consequences of such intervention.
    • Determine the cost trend of the intervention program since its implementation.
    • Evaluate the success or failure of the intervention in achieving its objectives and develop conclusions.
    • Defend the use of or discontinuation of the selected intervention.
    Note: The use of tables and/or charts to display economic data over the time period discussed is highly encouraged.
    Cite a minimum of three scholarly references.
    Format your paper consistent with APA guidelines.

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    The student examined one case of significant government intervention as it relates to the student's current industry of employment or an industry in which they are interested in working. Examples of intervention programs include, but are not limited to:

    • US agriculture support programs
    • Low income support programs (Food Stamps, Earned Income Tax Credit, Child Tax Credit, and Temporary Assistance to Needy Families)
    • Medicaid, Children's Health Insurance Program, Obamacare
    • Low income rent controls and housing vouchers
    • Government promoting renewable energy sources, discouraging fossil fuel sources

    Example of Significant Government Intervention:
    US Agricultural Support Programs
    --The government provides large subsidies to American farmers for their products. This means that those products are priced above equilibrium. This puts that market in a situation where there is a price ceiling. A price ceiling is where there is a binding price set above the market clearing price. This causes a surplus situation. (5)
    --Another example of government intervention in agricultural is in cotton farming. Subsidies are granted for cotton crops based on quality. This is particularly bad in years where there is something called a "bumper crop". That is where massive surpluses can occur. A bumper crop occurs when the weather is conducive to very high production yields of cotton. Often the extra cotton will sit in warehouses until is needed. (5)
    --In a free market, the surpluses would be eliminated by market forces applying downward pressure on prices. However, since there is a price ceiling in play, surpluses occur. (5)
    --For your one case, I would look at subsidies/farm programs for the entire agricultural industry. Information will be easier to present if you keep a broad topic as opposed to ...

    Solution Summary

    This answer looks at the explicit and implicit costs of the farm subsidy program. It looks at the costs and benefits to the market and to the economy of the program. It also looks at supports for termination of the farm subsidy program.

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