a. Why does the federal government subsidize farmers?

b. Explain how a subsidy paid to cotton farmers affects the price of cotton and the marginal cost of producing it.

Congress sent the White House a huge $290 billionelection-year farm bill which contained $40 billion for farm subsidies and almost $30 billion to farmers to idle their land. Bush has threatened to veto the bill, saying it is irresponsible and too generous to wealthy corporate farmers in a time of record crop prices.