Question

Wheat sold at ration shop is an example of

• A. Ceiling price
• B. Minimum support price
• C. Equilibrium price
• D. None of these

Hint:

The minimum support price ensures that farmers are guaranteed a certain price for their crops, helping to stabilize the agricultural market.

Answer 1

The Correct Option is B

Step 1: Understanding price types.
In economics, a ceiling price refers to the maximum price that can be charged for a product, while a minimum support price is the minimum price set by the government at which agricultural goods, such as wheat, are bought from the farmers. The support price ensures that farmers can sell their goods at a price that covers production costs.

Step 2: Analyzing the options.
(A) Ceiling price: This refers to a price limit above which goods cannot be sold. It is not applicable to the situation of wheat at ration shops.
(B) Minimum support price: Correct. Wheat sold at ration shops is typically sold at a minimum support price, ensuring that farmers are paid a fair price and consumers can access affordable food.
(C) Equilibrium price: This refers to the price at which supply equals demand. It does not apply to rationed goods like wheat.
(D) None of these: This is incorrect because the correct answer is (B) Minimum support price.

Step 3: Conclusion.
The correct answer is (B) Minimum support price, as wheat at ration shops is typically sold at a government-established minimum price to protect both the producers and consumers.