When might the government implement a buffer stock scheme?

A buffer stock scheme is implemented by the government primarily to stabilize commodity prices. This type of scheme involves the government buying and storing excess supply of a commodity during periods of high production and then releasing that stock during times of low production or high demand. This approach helps to prevent drastic fluctuations in prices that can occur due to seasonal changes in supply and demand.

When the government maintains a buffer stock, it can reduce the volatility in prices, ensuring that farmers receive a more consistent income and consumers have access to stable prices over time. This is especially crucial for staple commodities that form the basis of many people's diets, as price stability can be essential for food security.

In contrast, other options do not align with the purpose of buffer stock schemes. Increasing the price of luxury goods, decreasing consumer spending, or promoting market monopoly do not concern the government’s aim to maintain price stability in essential commodities. Therefore, the focus on stabilizing prices of goods, particularly those that are vital for consumers, is the primary reason for implementing a buffer stock scheme.