Question

Would the U.S. economy be better off without government subsidies to agriculture? Do you think consumers...

Would the U.S. economy be better off without government subsidies to agriculture? Do you think consumers would benefit if subsidies were discontinued?

Homework Answers

Answer #1

No, the US economy would not be better off without government subsidy to the agriculture sector. In the absence of the government subsidy, the price of the agriculture product would be completely market dependent. It can create few problems like in the situation of drought or low production the prices of the agriculture goods will be very high.

As the demand for the agriculture products is inelastic i.e. the demand for those products doesn't change much with a change in the price, the household will have to spend a huge amount of their income on those goods. This will reduce the expenditure on other products. And will have a negative effect on the overall demand in the economy. A cheaper food product is in the ultimate interest of the consumers in the economy.

The consumer will be on the losing end if the subsidies are reduced or eliminated.

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