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From course:

Economics A Level (DONEEEEEEE)

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Question:

Why are Fair Trade Schemes Beneficially and Costly?

Author: eric_galvao



Answer:

-They can allow Long Term Planning to be Easier for Producers, as it Removes the Large Fluctuations in Price that is often seen in Primary Products -But Distorting the Market Price may lead to Overproduction. Farmers may fail to Recognise that Low Prices are a Signal for them to Grow a Different Crop. When Prices are Low, Farmers may Flood the Market and Drive the Price down Further, negatively affecting Farmers who aren't on the Fair Trade Scheme


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