Government Cheese: A Case Study of Price Supports

In this paper, we present a case study that uses a Planet Money podcast to introduce microeconomics students to several important economic concepts. The podcast, which is about a policy intervention in the dairy industry, reveals the unintended consequences of government price supports under the Food and Agriculture Act of 1977, which increased dairy price supports through government purchases of manufactured milk products. By 1981, the government was struggling to reduce its stockpile of 560 million pounds of cheddar cheese stored in caves across the Midwest. This case study examines the history of dairy price supports and the government’s resulting acquisition of millions of pounds of cheese, butter, and nonfat dry milk. Available on request are detailed teaching notes with learning objectives and background materials, questions (and answers) for student evaluation, and a table displaying meta-data for each question, such as learning objective, difficulty level, and Bloom’s Taxonomy level.