Instructions: Complete the following exercises based on the reading passage, Matching: Match the economic term with its correct definition. A. The excess supply of a good when production exceeds demand. B. The federal agency responsible for managing food and agricultural policies. C. The financial assistance provided by the government to support businesses or industries. D. The act of a government influencing the economy through policies or financial support. E. The value of the best alternative forgone when making a decision.
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Did you know that the concept of economic surplus dates back to classical economics in the 18th century? Think of Adam Smith's invisible hand; he emphasized how markets can self-regulate through supply and demand! When production overshoots what people actually want to buy, it creates that pesky excess supply, which can lead to price drops and even unsold inventory, not ideal for any business! In the real world, government interventions in the economy can take several forms, such as subsidies for farmers, which help stabilize food prices. If demand for corn soars due to a new trend in superfoods, the government might step in with financial assistance to ramp up production. This balance helps ensure that consumers have access to food while also supporting agricultural workers!
