Research the impact that farm subsidies have on market price as well as supply and demand. Choose from either tobacco, corn, and/or cotton to research. How much does the government pay in subsidies to your selected product? What would happen to demand if there were no subsides?

After researching your selected product, does it seem that subsidies are working for the consumer as well as the farmer? Explain your answer using examples from your research.

answer

watching

108

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Patrina SchowalterLv2

20 Sep 2018

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

Corn is a very valuable product for which the U.S. government routinely offers subsidies. With no price support, the equilibrium price for corn is $300 per ton and the equilibrium quantity is 500 million tons per year. Suppose that the government agrees to pay farmers $350 for every ton of corn they produce and can't sell in the market. According to the farmer's market supply curve, 600 million tons per year is supplied at the price of $350 a ton, so production should increase to this amount. However, domestic users of corn cut back their purchases. Only 450 million tons a year is demanded at the price of $350 a ton, and purchases decrease to this amount. Farmers continue to produce 500 million tons of corn per year, so because they produce a greater quantity of corn than domestic buyers are willing to purchase, something must be done with the surplus. To make the price support work, the government decides to buy the surplus. Step 2 Use the scenario to answer the following questions. In a one-page (250-word) document, answer the following questions using the information provided in the scenario from Step 1: * In this example, how many million tons does the government agree to buy? At what price? * How much in total does the U.S. government provide in subsidy to the corn farmers? Why? * Is the price support in this example efficient or inefficient? Explain your reasoning. * Is the subsidy fair? Explain your reasoning.

aquamarinecoyote26

15. The inverse demand function for bananas is pa=20-9d and the inverse supply function is Ps= 9s, where prices are measured in cents and bananas are measured in pounds. a. If there are no taxes or subsidies, what is the equilibrium quantity? What is the equilibrium market price? (3 marks) b. If a subsidy of 2 cents per pound is paid to banana growers, what is the new equilibrium price and quantity? How much do growers receive per pound? How much do consumers pay per pound? (4 marks) c. Compute the change in the consumer and producer surplus? Show clearly on the graph? Does the subsidy cause a deadweight loss? If so, how large. Explain using a suitable diagram. (5 marks) Express the change in price as a percentage of the original price. If the cross-elasticity of demand between bananas and apples is +0.5, what will happen to the quantity of apples demanded as a consequence of the banana subsidy (assume the price of apples stays constant). State your answer in terms of a percentage change. (4 marks)

Step 1: Read the following scenario. Corn is a very valuable product for which the U.S. government routinely offers subsidies. With no price support, the equilibrium price for corn is $300 per ton and the equilibrium quantity is 500 million tons per year. Suppose that the government agrees to pay farmers $350 for every ton of corn they produce and can't sell in the market. According to the farmer's market supply curve, 600 million tons per year is supplied at the price of $350 a ton, so production should increase to this amount. However, domestic users of corn cut back their purchases. Only 450 million tons a year is demanded at the price of $350 a ton, and purchases decrease to this amount. Farmers continue to produce 500 million tons of corn per year, so because they produce a greater quantity of corn than domestic buyers are willing to purchase, something must be done with the surplus. To make the price support work, the government decides to buy the surplus.

Step 2: Use the scenario to answer the following questions.

In a one-page (250-word) document, answer the following questions using the information provided in the scenario from Step 1:

In this example, how many million tons does the government agree to buy? At what price?

How much in total does the U.S. government provide in subsidy to the corn farmers? Why?

Is the price support in this example efficient or inefficient? Explain your reasoning.

Is the subsidy fair? Explain your reasoning.

coppercoyote908

Weekly leaderboard

Home

Homework Help 3,900,000

Economics 400,000

Unlock all answers

Related textbook solutions

Principles of Economics

Principles of Macroeconomics

Principles of Microeconomics

Related questions

Related Documents

ECO 111 Study Guide - Final Guide: Gross Domestic Product, Underemployment, Mixed Economy

ECO101H1 Chapter Notes - Chapter 7: Takers, Price Floor, Price Ceiling

ECO105Y1 Study Guide - Midterm Guide: Health Care In Canada, Unintended Consequences, Marginal Revenue

Weekly leaderboard