A developing country wants to set up a subsidy system to help its farmers. Which of these subsidies will directly benefit farmers? (2 correct answers) Fertilizer subsidies Guaranteed Price (like the Minimum Support Price in India) Free rations to the poor A universal ration system with an inferior good A cash transfer system for the poor

A developing country wants to set up a subsidy system to help its farmers. Which of these subsidies will directly benefit farmers? (2 correct answers) Fertilizer subsidies Guaranteed Price (like the Minimum Support Price in India) Free rations to the poor A universal ration system with an inferior good A cash transfer system for the poor

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter4: Demand And Supply: Applications And Extensions

Section: Chapter Questions

Problem 10CQ

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The majority of farm subsidies flow toward . a. Poor, small-scale farmers. b. Rich, large-scale farmers. c. Government employees. d. Grain wholesalers.
“Because consumers as a group must ultimately pay the total income received by farmers, it makes no real difference whether the income is paid through free farm markets or through price supports supplemented by subsidies financed out of tax revenue.” Do you agree?
A subsidy is a direct tax on imported goods Question 48 options: True False
. Which of the following statements are true? a) Economists call the farm price support system "welfare for the rich" b) There is a fixed amount of jobs in the economy. c) Price ceilings and price floors cause economic inefficiency and corruption. d) General price controls is considered by economsts among the most stupid policies. e) Only Democrats support price control policies.
Use public choice theory to explain the persistence of farm subsidies in the face of major criticisms of those subsidies. If the special-interest effect is so strong, what factors made it possible in 1996 for the government to end price supports and acreage allotments for several crops?
In 2013, it was estimated that the total value of all corn-production subsidies in the United States totaled about $4.8 billion. The population of the United States was approximately 315 million people that year. a. On average, how much did corn subsidies cost per person in the United States in 2013? (Hint: A billion is a 1 followed by nine zeros. A million is a 1 followed by six zeros.) b. If each person in the United States is only willing to spend $0.50 to support efforts to overturn the corn subsidy, and if antisubsidy advocates can only raise funds from 10 percent of the population, how much money will they be able to raise for their lobbying efforts? c. If the recipients of corn subsidies donate just 1 percent of the total amount that they receive in subsidies, how much could they raise to support lobbying efforts to continue the corn subsidy? d. By how many dollars does the amount raised by the recipients of the corn subsidy exceed the amount raised by the opponents of the corn…
Discuss and provide two examples of how subsidies can be economically harmful.
President Clinton's crime bill from 1994 suggested a federal program that worked much like a price subsidy; the federal government would augment local government expenditures on police with additional funds from the federal treasury. Congressional Republicans wanted to replace this price subsidy with block grants to the states which would involve just giving the states a set amount of money which they could allocate as they chose. Suppose a state is receiving $100 million from the federal government under the current price subsidy system. Now suppose the funding is changed so they receive a $100 million block grant. Analyze the impact on spending for "police services" and "all other goods" for this particular state. In particular, will "police services" increase, decrease, remain unchanged or is it impossible to tell? Why?
Subsidies: Definition Explain why governments provide subsidies. Draw a diagram to show a subsidy, and analyze the impacts of a subsidy on market outcomes. Discuss the consequences of providing a subsidy on the stakeholders in a market, including consumers, producers and the government (EVALUATE). Calculate the effects on markets and stakeholders of subsidies
Do you agree with each of the following statements? Explain why or why not.a. The problem with U.S. agriculture is that there are too many farmers. That is not the fault of farmers but the fault of government programs.b. The Federal government ought to buy up all U.S. farm surpluses and give them away to developing nations.c. All industries would like government price supports if they could get them; agriculture obtained price supports only because of its strong political clout.
Why is subsidy used to correct market failure
You are an advisor to the Prime Minister of your country. Currently, post-secondary students in your country pay the full cost of their education, without the help of any government subsidies. The Prime Minister is strongly considering a new policy that fully subsidizes the cost of a post-secondary education. a) The Prime Minister asks you to explain why the current system, without any subsidies, should remain in place. Based on your understanding of the course material, describe why any subsidies for post-secondary education would be bad policy. b) After hearing your argument against tuition subsidies, the Prime Minister asks you to explain why it might be valuable to subsidize 100% of post-secondary education costs. Based on your understanding of the course material, describe why fully-subsidized post-secondary education would be good policy.