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JAMB Economics 1995 Question 31

Question 31

Agriculture

The government can influence the prices of agricultural products by

  1. A.fixing minimum prices when agricultural output is low
  2. B.fixing maximum prices in years of bumper harvests
  3. C.the use of buffer stock and stabilization funds
  4. D.paying all farmers producing identical crops a uniform amount of money.
Show the answer and explanation

Answer: C (the use of buffer stock and stabilization funds)

Explanation

Under a buffer stock scheme, the government buys produce when harvests are big and sells it when they are poor, keeping prices steady.