A severe drought can actually lessen the total amount of government aid that United States farmers receive as a group. The government pays farmers the amount, if any, by which the market price at which crops are actually sold falls short of a preset target price per bushel for the crops. The drought of 1983, for example, caused farm-program payments to drop by $10 billion.
Given the information above, which of the following, if true, best explains why the drought of 1983 resulted in a reduction in farm-program payments?
(A) Prior to the drought of 1983, the government raised the target price for crops in order to aid farmers in reducing their debt loads.
(B) Due to the drought of 1983, United States farmers exported less food in 1983 than in the preceding year.
(C) Due to the drought of 1983, United States farmers had smaller harvests and thus received a higher market price for the 1983 crop than for the larger crop of the preceding year.
(D) Due to the drought of 1983, United States farmers planned to plant smaller crops in 1984 than they had in 1983.
(E) Despite the drought of 1983, retail prices for food did not increase significantly between 1982 and 1983.
here my question is: when i read the argument above, i got that
the government provides the difference of the target price and the market price if the market price falls short the target price. but the government does not pay anything if MP(market price) > TP(target price).
The argument says that drought caused farm-program payments to drop by $10 billion so i need to select the answer that states the reason of why the market was not below the TP and thus lost 10B.
Please lemme know if I am wrong!!
OA after few posts..
Given the information above, which of the following, if true, best explains why the drought of 1983 resulted in a reduction in farm-program payments?
(A) Prior to the drought of 1983, the government raised the target price for crops in order to aid farmers in reducing their debt loads.
(B) Due to the drought of 1983, United States farmers exported less food in 1983 than in the preceding year.
(C) Due to the drought of 1983, United States farmers had smaller harvests and thus received a higher market price for the 1983 crop than for the larger crop of the preceding year.
(D) Due to the drought of 1983, United States farmers planned to plant smaller crops in 1984 than they had in 1983.
(E) Despite the drought of 1983, retail prices for food did not increase significantly between 1982 and 1983.
here my question is: when i read the argument above, i got that
the government provides the difference of the target price and the market price if the market price falls short the target price. but the government does not pay anything if MP(market price) > TP(target price).
The argument says that drought caused farm-program payments to drop by $10 billion so i need to select the answer that states the reason of why the market was not below the TP and thus lost 10B.
Please lemme know if I am wrong!!
OA after few posts..
