Due to prolonged droughts, there was a massive crop failure in your state leading to scarcity of food crops. As the economic advisor to the chief minister, which of the following policies would you recommend?

Increase the prices of food crops so that profits can be maximized

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Decrease the prices of food crops so that more people can afford it

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Buy food from another state and sell it at subsidised prices

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Recommend a diet based on animal products

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Solution

The correct option is C
Buy food from another state and sell it at subsidised prices

The priority of the government should be to minimize the scarcity. Since the scarcity is due to non-availability of crops, buying crops from another state and selling it at subsidised prices would be the correct policy to adopt. Adjusting the prices without addressing the problem of scarcity cannot resolve the situation.

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