Hi! I am a teacher of IB Economics and Humanities at ISS International School located in Singapore. Fittsonomics is my blog for discussing economics in the news and other current events. Click the Economic resources for class resources.
Enjoy!
Buffer stock schemes are necessary to stabilize the price in markets where large shifts in supply can greatly affect the income of goods. The government puts the bottom and top prices to protect prices from extreme fluctuations. Although it does become costly to store the surplus, the fact that they give confidence to producers and allow them to have a somewhat steady income is vital for an economy. However looking at a worldwide market it is almost never necessary to put a cover to the amount of production because there will always be someone willing to buy the surplus if it is exported. Maybe it is necessary to put a price band for domestic goods, however instead of storing the surplus it should be exported to the world market.
Buffer stock schemes are necessary to stabilize the price in markets where large shifts in supply can greatly affect the income of goods. The government puts the bottom and top prices to protect prices from extreme fluctuations. Although it does become costly to store the surplus, the fact that they give confidence to producers and allow them to have a somewhat steady income is vital for an economy. However looking at a worldwide market it is almost never necessary to put a cover to the amount of production because there will always be someone willing to buy the surplus if it is exported. Maybe it is necessary to put a price band for domestic goods, however instead of storing the surplus it should be exported to the world market.
ReplyDeleteI know you are impressed
Your ex-H period students
-Matt & Antonio
Well done, I am proud!
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