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Market Failure

I am in need of help with the below questions. The questions are based on the case study listed under question number 5. The questions are to be answered with the topic of Micro- Governement and Market Failure.

1. Why do farmers in the U.S. demand such research efforts?

2. Is this another form of a price support system?

3. Does this article illustrate the good/bad paradox in agriculture?

4. Should the social costs of agricultural research be considered?

5. What do you think will be the long-run effect of these research efforts?

Case Study

In Florida, the huge contraption turns and begins lumbering down the next row of juice-laden Valencia oranges. The operator watches his progress on two TV screens in his cab, his left hand locked into position to keep the harvester straight while his right hand grips a six-button joystick. Since the machine is designed to pick juice oranges, the fruit can be handled roughly. The machine, guided by the joystick, manipulates metal bars through the trees' branches, resulting in a startling and violent sight. With a tremendous sound, a sudden deluge hits, and it's raining oranges.

In just 10 minutes, the machine has taken the fruit from 10 trees, a feat it would have taken four human pickers a full day to accomplish.

Besides savings in wages the machine does not:

· Have to be represented by the United Farm Workers.

· Attract the attraction of immigration officials.

· Require subsidized housing and other social services.

· Ever get sick, ever tire, ever go on strike, and can work day or night.

While the picture seems to be clear - mechanize farming as soon as feasible -- economics teaches us that for every benefit there is a cost.

What are the benefits to farmers?

· Cheaper and faster harvesting without the implicit costs listed above.

· Pickers are paid "piecework rates" i.e. by weight. Their incentive is to pick everything as fast as possible, including small green oranges within reach.

What are the benefits to the American public?

· In the ethos of "harvest of shame," Americans prefer that workers not be exploited. People working complex jobs for a good wage are preferable to others doing back-breaking work for little pay.

· "Instead of preserving a labor-intensive industry dependent on alien workers in the U.S., a rational strategy might be to phase out dependence on foreign workers by mechanizing
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1. Why do farmers in the U.S. demand such research efforts?

Labor in the US is very costly. If someone wants something done using manual labors besides the direct cost that you need to pay to the labor you have to consider all the associated implicit costs that come with it. According to the case study the farmers get access to cheaper and faster harvesting without worrying about unions, illegal immigrants, benefits, or the working conditions. Thus it takes their cost down, putting more into the pockets of the farmers.

2. Is this another form of a price support system?

A price support system is a a government subsidy used to maintain prices at a certain level. In the present case when the ...

Solution Summary

Micro- Government and Market Failure are correlated.