Asked Nov 6, 2019

Should the government subsidize farmers? Under what circumstances should the government permit
price discrimination?


Expert Answer

Step 1

Subsidies in agriculture refers to the rebates in business to farmers given by government as incentive for increasing their productivity. This will also affect cost of farmers and supply of agricultural items in economy.

Step 2

Government should subsidize farmers because:

a) Food supply in an economy must be protected from natural calamities like drought, hurricanes etc. also, during wars and recessions, government has to provide adequate supply of goods. Providing subsidies in such items will be a great initiative for such incidents.

b) Co...

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