Using microeconomics theory, this paper explains the positive effect of the welfare effect of the government purchasing the surplus grain of farmers at a protective price.

It is the same as the title.

Answer 1

In order to answer this question, we need to use microeconomic theory, especially value theory, to explain the welfare effect of the government's open purchase of farmers 'surplus grain at a protected price.

In the theory of value, the value of an asset or item is determined by the relationship between supply and demand in the market. When farmers were willing to sell their surplus grain at a protected price, their value would be reflected. The government would be able to bring benefits to farmers by purchasing surplus grain at a protected price. To be specific, the government purchasing surplus grain from farmers at a protected price could guarantee the income of farmers, reduce the production costs of farmers, increase the employment opportunities of farmers, promote the development of agricultural economy, improve the country's grain reserve capacity, and thus maintain the country's food security.

The government's purchase of surplus grain at a protected price could also alleviate the contradiction between supply and demand in the grain market and promote the development of the grain market. When the government buys the surplus grain of farmers at a protected price, the supply of grain in the market will increase, and the price of grain will fall, thus promoting the healthy development of the grain market. When there is too much food on the market, the price of food will fall, and farmers will plant less food to reduce the impact on the environment. Therefore, the government's purchase of surplus grain at a protected price could alleviate the contradiction between supply and demand in the grain market and promote the healthy development of the grain market.

The government's purchase of surplus grain at a protected price could also increase the enthusiasm of farmers to plant and promote the development of the agricultural economy. When the government purchased the surplus grain of farmers at a protected price, farmers would have more confidence in planting grain, thus increasing their enthusiasm for planting and promoting the development of the agricultural economy. The government's purchase of surplus grain at a protected price could also increase the income of farmers and promote their consumption behavior, thus promoting the development of the entire economy.

Therefore, the welfare effect of the government purchasing farmers 'surplus grain at a protected price is positive. It can not only guarantee farmers' income, reduce farmers 'production costs, increase farmers' employment opportunities, promote the development of agricultural economy, improve the country's grain reserve capacity, but also ease the contradiction between supply and demand in the grain market, promote the healthy development of the grain market, improve farmers 'enthusiasm for planting, and promote the development of agricultural economy.