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Unformatted text preview: government buys the excess supply Farmers Consumers Raises farmers incomes Leads to accumulation of excess supply that is wasted Deficiency Payment Subsidy The government gives a subsidy to farmers, which lowers consumer prices Farmers and consumers The government Both farmers and consumers are better off Government revenue is has to be spent on the subsidy Quota Quantity limit Farmers are not allowed to produce more than the quota quantity Farmers Consumers Raises farmers incomes Consumers are worse off due to higher prices...
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This note was uploaded on 04/12/2011 for the course ECONMICS 100 taught by Professor Carr during the Spring '11 term at University of Toronto- Toronto.
- Spring '11