A severe drought can actually lessen the total amount of government aid that United States farmers receive as a group. The government pays farmers the amount, if any, by which the market price at which crops are actually sold falls short of a preset target price per bushel for the crops. The drought of 1983, for example, caused farm-program payments to drop by $10 billion.
Given the information above, which of the following, if true, best explains why the drought of 1983 resulted in a reduction in farm-program payments?

Question

Examsnet · Accepted Answer

Correct Answer is :  Due to the drought of 1983, United States farmers had smaller harvests and thus received a higher market price for the 1983 crop than for the larger crop of the preceding year.

GMAT Verbal Reasoning Practice Test 6