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Could you please answer these two questions? 1- How the price of marketing loan program is...

Could you please answer these two questions?

1- How the price of marketing loan program is different from the price of the price support program?

2- How the market loan is different from the target price program?


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Answer #1

Answer 1;

Price of the marketing loan is determined in the market where demand of loans is equal to the supply of loans. Thus, the prices of marketing loans are purely market determined without any government interference. On the other hand, price of the price support program are subsidized prices set by the government to ensure availability of the product to the masses. These are not determined by the market where profit maximization plays an important role. The main aim of the price support program of the government is to support the group for which the particular program has been launched. There is no profit motive of the government in such programs.

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