In an effort to support the price of raw milk and dairy products, some dairy farmers...
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In an effort to support the price of raw milk and dairy products, some dairy farmers advocate a subsidy in cash for every cow that they leave unused. They argue that the subsidy increases the cost of dairy farming, which will reduce supply and increase the price of competitively produced dairy products. Critics argue that because the subsidy is a payment to the dairy farmers, it will reduce the cost of dairy farming and decrease prices. Which argument is correct? O A. The farmers' argument is correct. The subsidy will cause the supply curve to shift to the right. O B. The farmers' argument is correct. The subsidy will increase the cost of dairy farming because there is now an opportunity cost; the farmer must forego the subsidy in order to farm. O C. The critics argument is correct. In this case, the subsidy acts like increased revenue or serves to lower farmers' costs. In an effort to support the price of raw milk and dairy products, some dairy farmers advocate a subsidy in cash for every cow that they leave unused. They argue that the subsidy increases the cost of dairy farming, which will reduce supply and increase the price of competitively produced dairy products. Critics argue that because the subsidy is a payment to the dairy farmers, it will reduce the cost of dairy farming and decrease prices. Which argument is correct? O A. The farmers' argument is correct. The subsidy will cause the supply curve to shift to the right. O B. The farmers' argument is correct. The subsidy will increase the cost of dairy farming because there is now an opportunity cost; the farmer must forego the subsidy in order to farm. O C. The critics argument is correct. In this case, the subsidy acts like increased revenue or serves to lower farmers' costs.
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Related Book For
Principles of Macroeconomics
ISBN: 978-0134078809
12th edition
Authors: Karl E. Case, Ray C. Fair, Sharon E. Oster
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