1.Suppose the market price of Corn is $1.50 per bushel.

(a)Would a farmer sell corn to the market or to the government (CCC)? (See Table 29.2)

(b)If the market price rose to $2, what would the farmer do with his corn?

TABLE 29.2 Commodity Loan Rate 2016-2017 Loan Rates The Commodity Credit Corn $1.95 per bushel Corporation lends money to Wheat 2.94 farmers at fixed "loan rates" that Soybeans 5.00 are implicit price floors. If the Cotton (upland) 0.52 per pound market price falls below the CCC Rice 6.50 per hundredweight loan rate, the government keeps Peanuts 355 per ton the crop as full payment of the Honey 0.69 per pound loan or pays farmers a "loan Sugar (beet) 0.24 per pound deficiency payment." Source: U.S. Department of Agriculture (2017)