Suppose that to boost the production of rice, the Vietnamese government provides a subsidy of VND1,000/kg...

 

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Suppose that to boost the production of rice, the Vietnamese government provides a subsidy of VND1,000/kg of rice to farmers. Also assume the rice market in Vietnam is perfectly competitive and before the subsidy, the rice market is at an equilibrium, where P =VND12,000/kg and Q = 100 tons. Do you agree with the conclusion that this subsidy will benefit farmers and consumers equally? Suppose that to boost the production of rice, the Vietnamese government provides a subsidy of VND1,000/kg of rice to farmers. Also assume the rice market in Vietnam is perfectly competitive and before the subsidy, the rice market is at an equilibrium, where P =VND12,000/kg and Q = 100 tons. Do you agree with the conclusion that this subsidy will benefit farmers and consumers equally?

Answer rating: 100% (QA)

No the conclusion that the subsidy will benefit farmers and consumers equally may not be accurate The impact of the subsidy on farmers and consumers d... View the full answer