Test questions

I could use this passage from the Herald's editorial on farm policy today as two exam questions in my economics class:

It helps that the dairy program only kicks in when the milk price falls too low. Otherwise, the program does not require government payments. An earlier version of the dairy program, in which milk processors were forced to pick up the tab, would have required even less of the government. But the processors have successfully pushed the cost burden back onto the government and the taxpayer.

Question 1:  How do you define, and who defines, when the price is "too low."  My optimal choice is God, but I think she's too busy.  So instead of God, we'll rely on government bureaucrats, which is far from a second best solution.  Or we can rely on a mathematical formula, and assume that's a good proxy for Truth, or God.  But someone has to write the formula, and it's probably going to be government officials, and we're back to square one.

Question 2:  Explain the difference between the statutory burden of a tax, or government policy like milk supports being "paid for" by milk processors, and the true economic incidence of the tax or payment.  If my students can't do that, they have not mastered basic microeconomic principles.

Question 3 comes from the conclusion to the editorial: 

As the Senate takes up the farm bill, the senators ought to keep in mind the difference between the neo-feudalism that is being imposed by large corporations and the rural economy that thrives when the local needs of family farms are served.

I'll ignore the question of defining neo-feudalism, since I really don't understand what that means, and I haven't seen too many serfs slaving away on large corporate farms recently.   So I'll stick to this question:  Explain the difference between government support of small family farms and government income support payments to low income working families.   Be sure to deal with the issue of why the government should treat low income farmers differently than low income workers (or low income business owners) elsewhere in the economy.