Legal Definitions - price support

Price support refers to the act of artificially maintaining prices of a particular commodity at a certain level, usually through government intervention such as subsidies.

For example, the government may provide subsidies to farmers to keep the price of wheat at a certain level. This means that even if the market price of wheat falls below the desired level, the government will step in and buy the excess supply to keep the price stable.

Another example is the price support for milk. The government may set a minimum price for milk to ensure that dairy farmers receive a fair price for their product. If the market price falls below this level, the government may purchase the excess milk to maintain the price.

These examples illustrate how price support can help stabilize prices and protect the income of producers. However, it can also lead to inefficiencies and distortions in the market, as well as increased costs for taxpayers who fund the subsidies.