Explain the concept of 'buffer stock' as a tool of price floor.

1.	Explain the concept of 'buffer stock' as a tool of price floor.
Answer» Solution :Buffer stock is an important tool in the HANDS of GOVERNMENT to ensure price floor. If in case, the market price is lower than what the government FEELS should be given to the farmers /PRODUCERS, it would purchase the commodity at higher price from the farmers/producers so as to maintain stock of the commodity with itself, to be released in case of shortage of the commodity in future.

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