ECON 2200 Lecture Notes - Lecture 21: Agricultural Marketing Act Of 1929, Yip Harburg, Jay Gorney
14 May 2018
School
Department
Course
Professor
ECON 2200
Lecture 21
• Federal Intermediate Credit Act
o Provided short-term credit for farmers
• Agricultural Marketing Act (1929)
o Let farmers help themselves by allowing farmers to (like OPEC)
form cooperative groups where they would collectively control
prices. Government promised not hold them to Anti-trust laws.
1. Didn’t work very well though
• Smoot-Hawley Tariff (1930)
o A general, broad tariff that included many agricultural products;
however, there was not really a lot of agricultural imports to the
US. It was really a solution to a problem that didn’t exist.
1. They wanted it, got it, but weren’t really helped by it.
• Bottom Line: Government programs largely ineffective because
supply was very price elastic.
o Price elasticity of supply = How responsive is quantity of supply
= % of Qs / % of P
1. If PES > 1 = elastic
Farm products have elastic supply = % of Qs > % of
P
2. If PES < 1 = inelastic
o Government programs encourage additional output and create
surplus
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