Question on: JAMB Economics - 1995

The government can influence the price of agricultural products through several methods. The use of buffer stocks and stabilization funds is a common approach:

• Buffer Stock: The government buys up surplus agricultural products when prices are low (e.g., after a bumper harvest), storing them in a buffer stock. When prices rise (e.g., due to a poor harvest), the government releases the stored products to increase supply and moderate price increases.
• Stabilization Funds: These funds can be used to support prices in various ways, such as providing subsidies or loans to farmers or intervening in the market to buy or sell commodities.

Let's look at why the other options are less suitable:

• A: Fixing minimum prices when output is low could benefit farmers. However, this could make products unaffordable for