Question

5. The effect of corn prices on the market for wheat Aa Aa The increased demand for corn to be used in ethanol is driven in large part by nearly $10 billion in government subsidies NEW Consider three groups of people: . Consumers (who are also taxpayers) . Commodity farmers (who can plant either corn or wheat) Cattle ranchers (who buy corn or wheat to feed to livestock) Which of the following best describes who gains and who loses as a result of the government subsidies? O None of these groups gains anything; the only ones to benefit are the ethanol-producing companies. Farmers gain; consumers and ranchers lose. Farmers and ranchers gain; consumers lose. Farmers and consumers gain; ranchers lose.

Answer 1

As the government is paying subsidies to the ethanol producer, it has increased the demand for the corn and thereby increased the price, it will benefit the farmers who will be selling the corns are a high price and consumers and ranchers will be at a loss as they have to pay a high price.

The answer is "B" Farmers gain; consumers and ranchers lose.