Question

2. American corn farmers receive billions of dollars in taxpayer subsidies each year. These subsidies allow them to sell their grain at prices below what it costs to produce it, particularly for export markets. How do U.S. corn subsidies hurt Mexican farmers? What could be done to address this problem, and why would the solution be effective? Please explain thoroughly.

Answer 1

It can be mentioned that since corn is a agricultural product, they operate under the perfect competition and because subsidies are being received by the American farmers they will have a significant advantage to lower their price and since Mexican farmers don't have subsidies and they are operating at normal profit because it is a perfect competition they cannot lower their price and they will be forced to leave the market and in this way subsidies are affecting Mexican farmers. In order to address this issue the Mexican government can either impose subsidies to their farmers or bring in more productive method so that the productivity of Mexican farmer increases. however subsidies to the Mexican farmers as well can be the effective one as they would be in par with the US farmers