An economic problem! ! ! ! ! urgent

This can be explained by microeconomic theory. The price elasticity of agricultural product demand is often less than 1, that is, when agricultural product prices change, agricultural product demand is often inelastic. "Cheap grain hurts farmers" is a classic problem in economics. How much money farmers can sell after harvest depends on two factors: output and food price, which is the product of the two. But these two variables are not independent, but interrelated, and their correlation is determined by the downward sloping food demand line. In other words, the lower the price, the greater the demand; The higher the price, the smaller the demand. It should also be noted that the grain demand line lacks elasticity, that is, demand is not very sensitive to price changes. When food prices fall, the demand for food will increase, but not too much. The basic truth is that food is a necessity, and the demand for food is mainly determined by the physiological demand for food. In addition, for most people today, the proportion of food expenditure in the total expenditure has been very small, and it will become smaller and smaller, which also leads to people's insensitivity to food price changes.

After recognizing this feature of the grain market, it is not difficult to understand the following phenomenon: when the grain output increases substantially, farmers can only compete to reduce prices to sell their own grain. However, due to the inflexibility of food demand, farmers can only sell food after drastically reducing food prices, which means that food prices often fall sharply at the time of grain harvest. If the percentage of falling food prices exceeds the percentage of increasing food production, there will be a situation in which the increase in food production will not increase or even decrease, that is, "cheap food will hurt farmers"

In the poor harvest year, due to the inflexibility of the demand curve, the reduction of the balanced quantity of agricultural products will be less than the increase of the balanced price caused by it, and finally the total income of farmers will increase.

Based on the above economic facts and experiences, many countries have successively implemented the policy of supporting prices for agricultural products in order to protect farmers and their interests and protect and support the development of agriculture. Its general practice is to reduce the impact of agricultural products by reducing the planting area of agricultural products, so as to maintain the price of agricultural products at a certain level and ensure the income of farmers and farmers.