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Q57 (CDS-II/2019) Economy › Agriculture & Rural Economy › Agricultural price policy Answer Verified

W(Chiczehroone of the following is an example of a price floor?

Result
Your answer: —  Â·  Correct: A
Explanation

In economics, a price floor is a government-imposed lower limit on the price that may be charged for a particular good or service, typically set above the market-clearing price to protect producers [2]. The Minimum Support Price (MSP) in India is a classic example of a price floor [3]. It is the rate at which the government guarantees to purchase crops from farmers, ensuring they do not suffer from distress sales if market prices fall below this threshold [3]. Jowar is one of the 23 agricultural commodities for which the government sets these price floors annually. In contrast, the Maximum Retail Price (MRP) acts as a price ceiling (an upper limit), while subsidies for fertilizers and ration shop prices (Central Issue Price) represent fiscal transfers and subsidized consumer pricing respectively, rather than price floors [1].

Sources

  1. [2] Microeconomics (NCERT class XII 2025 ed.) > Chapter 5: Market Equilibrium > 5.2.2 Price Floor > p. 85
  2. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 9: Agriculture > MINIMUM SUPPORT PRICE > p. 328
  3. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 9: Subsidies > 9.5.1 Food Corporation of India (FCI) > p. 293
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SIMILAR QUESTIONS

CAPF · 2014 · Q29 Relevance score: -1.65

Which of the statements given below is/ are correct ? 1. For the marketing year 2014-2015, the minimum support price (MSP) for wheat in India has been fixed at Rs. 1,400 / quintal 2. MSP is the rate at which the government sells the grains through the fair price shops Select the correct answer using the code given below : .

CDS-II · 2018 · Q71 Relevance score: -1.98

With regard to the cabinet decision in July 2018, the percentage increase in Minimum Support Price (MSP) is maximum in which one of the following crops?

IAS · 2020 · Q39 Relevance score: -2.52

Consider the following statements : 1. In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India. 2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise. Which of the statements given above is/are correct ?