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ECON1000 Open Campus Micro Paper - contributes 20% [DUE: October 23rd @ 11:55pm] Case Study: Demand and Supply Analysis (Units 4 and 5) This Micro...

extract 2: Colombian government extends subsidies to the coffee sector. In South America, despite a budget deficit, the Colombian government announced a subsidy package in November 2008, aimed at controlling the escalating price of coffee. The subsidy package includes assistance to farmers by extending discounts of up to 50% on fertilizer to farmers and provision of cash credits to farmers for the replacement of old and poor-yielding coffee trees with newer and higher-yielding varieties. Examine the government intervention in Colombia. To what extent were the objectives of the Colombian government met. Justify your response.

Extract 3: Venezuela maintains strict price regimes on basic foods. Since 2003, the Venizuelan President has maintained a strict price regine on some basic foods like coffee, beams. sugar and powdered milk. But this measure designed to curb inflation has alienated Venezuela's coffee importers who say their profit margins have been reduced to nothing.

For at least week, there has been no roasted coffee available on the shelves of Venezuelan supermarkets, as wholesalers and coffee improters have been with holding their coffee from sale. The situation is so bad that authorities have successfully stepped in to seize coffee, which is deliberately being with held from sale. Yet several food stores in Venezuela;s capital city Caracas say the coffee raids are not addressing the fact that shops are also running low on sugar, maize, powdered milk and beans. Store managers insist they are not being supplied with new stock from wholesalers and importers. Three days ago, street sellers working in the country's black market were still able to provide the roasted coffee that the supermarkets were not stocking. However, even they have since admitted defeat.

Examine the government intervention in Venezuela. To what extent were the objectives of the Venezuelan government met. Justify your response.

Which intervention is more effective? Justify your response.

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