lesson no. 13 Q2. What Is Support Price? How Does It Affect Producers?

Answer: Support price is a minimum price fixed by the government to protect producers, especially farmers, from very low market prices.

Effects on producers:

  • Farmers get a minimum price for their crops.
  • It helps protect their income when market prices fall.
  • If buyers do not purchase enough goods at that price, the government may buy the surplus under the support scheme.

Example: The government announces a minimum support price for wheat to help protect farmers’ earnings.

Remember: Support price protects producers by providing a minimum price.

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