APFIVE Agricultural Subsidy and Production Outcomes
If a government provides a per-unit subsidy to farmers that exceeds their per-unit cost of production, which of the following outcomes is most likely?
A
Decreased overall farming activity because subsidies make it unnecessary for producers to sell goods at competitive market prices.
B
Overproduction leading to waste or environmental harm due to increased supply beyond what’s needed by consumers or sustainable agriculturally.
C
Improved quality of crops as there are no financial incentives left behind encouraging cost-cutting measures that could compromise product quality.
D
Farmers may not produce enough food, leading consumers by forcing them into scarcity and higher prices due insufficient agricultural output across multiple markets globally.
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