Question

Benefits vs Costs of subsidizing agricultural products.

7 Review Question 6-7 (Autogradable) In the United States, many agricultural products (such as corn, wheat, and rice) are subsidized. What are the benefits of subsidizing these products? Instructions: You may select more than one answer. Click the box with a check mark for correct answers the wrong answers ts eBook higher prices for consumers and producers eferences lower prices for consumers and producers higher prices for consumers and lower prices for producers lower prices for consumers and higher prices for producers What are the costs? Instructions: You may select more than one answer. Click the box with a check mark for correct answers a the wrong answers. more expensive for taxpayers higher prices for consumers lower prices for producers U less agricultural products produced

Answer 1

1) Solution: lower prices for consumers and producers

Explanation: The effects of subsidy are that consumers pay less (i.e. higher consumer surplus); and producers pays lower costs of production (i.e. higher producer surplus)

2) Solution: more expensive for taxpayers

Explanation: The final cost of a subsidy often falls on consumers (or tax-payers)