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How can a government increase PES of an agricultural product?

Discuss how governments might attempt to increase PES of an agricultural product, consider whether they are likely to be successful.
I’ve come up with some ideas like provides training to increase factor mobility, provides money to R&D to shorten production time or buffer stock, but I just don’t know how to explain.
Can anyone pls help me?
Thanks for help!!!!

Reply 1

jpt4749

Original post by Sherryew

Not quite sure but maybe they can use the subsidies in order to encourage farmers to keep the level of production and pay for the remaining of excess supply so producers won’t have to depend that much on consumers :wink:

Reply 2

David1828

I'm also puzzled by the question, still what you're describing by the government purchasing the excess supply is basically a change in demand as the government is increasing purchases. PES is still intact, I feel Cambridge in their never ending quest to make evermore complicated questions made a mistake on this one. A government cannot change the PES of agricultural goods as it cannot change the nature of the of the production cycle. An apple orchard simply cannot increase or reduce it's production along with price changes no matter how many subsidies or taxes you place. Even for more naturally elastic goods like corn, once the seeds are planted a farmer will not change it's production as it would never recoup sunk costs. I feel this is wrong and it's only confusing students

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