4.1.8.9 Buffer Stocks (correcting market failure)

Question 1

Buffer stocks are stocks of produce which have not yet been taken to market.

Accepted Answer

True

Question 2

Farming has positive externalities it helps to sustain rural communities

Accepted Answer

True

Question 3

If the price floor is significantly, and consistently above the FMP,...

Accepted Answer

then the organization will eventually run out of money.

Question 4

The upper limit/price ceiling protects...

Accepted Answer

Consumers

Question 5

The system relies on starting with a ... harvest, indeed,

Accepted Answer

Good

Question 6

Buffer stock systems should be self-financing.

Accepted Answer

True

Question 7

Which is an additional cost to society of buffer stock schemes?

Accepted Answer

extra storage, insurance, building costs, costs of managing the scheme

Question 8

without stocks in the system it is not possible to react to a .... harvest

Accepted Answer

Poor

Question 9

Buffer stocks stabilise prices by ...

Accepted Answer

Both 1 and 2

Question 10

Below a price floor

Accepted Answer

intervention buying will occur

Question 11

Setting up a BSS also requires a significant amount of start-up capital, since money is needed

Accepted Answer

to buy up the product when prices are low

Question 12

It is possible the government could make a profit from a buffer stock scheme.

Accepted Answer

If it buys during a glut and sells during a shortage

Question 13

Stable prices help maintain farmers' incomes and profits. Thus,...

Accepted Answer

Both 1 and 2

Question 14

A target price cannot be achieved through intervention buying and selling.

Accepted Answer

False

Question 15

Above a price ceiling

Accepted Answer

intervention selling will occur

Question 16

If the price ceiling (upper limit) is significantly below the FMP, then the organization will

Accepted Answer

end up selling stock and eventually run out of stocks

Question 17

Stable prices can increase consumer surplus. Particularly of the poorest consumers of food.

Accepted Answer

True

Question 18

Buffer stock systems distort the operation of free markets...

Accepted Answer

and prevent the price mechanism working effectively.

Question 19

Buffer stock systems work best for...

Accepted Answer

Non-perishable goods

Question 20

What is A?

Accepted Answer

Bad harvest

Question 21

Buffer stock systems can create moral hazard, as it is

Accepted Answer

Both 1 and 2

Question 22

A price ceiling is...

Accepted Answer

An upper limit

Question 23

A price flooris...

Accepted Answer

A lower limit

Question 24

What is B?

Accepted Answer

Good harvest

Question 25

The lower limit/price floor protects...

Accepted Answer

Producers

Question 26

What is D?

Accepted Answer

Release of stored stock

Question 27

What is C?

Accepted Answer

Buy and add to stock

Question 28

The success of a BSS depends on those managing a scheme to correctly estimate av. price

Accepted Answer

True

Question 29

Over the LR, Buffer stocks may cause rising surpluses, i.e. a misallocation of resources

Accepted Answer

True

Question 30

Excess stocks built up by the organization are dumped onto the market.

Accepted Answer

This creates a price crash

4.1.8.9 Buffer Stocks (correcting market failure)

Questions 30

4.1.8.9 Buffer Stocks (correcting market failure)

Questions 30