An effective subsidy paid to soybean farmers ________ the market price of soybeans and ________ the farmers' marginal cost of production.

Question

Quizplus · Accepted Answer

An effective subsidy paid to soybean farmers lowers the market price of soybeans and increases the farmers' marginal cost of production. This is because the subsidy makes it cheaper for farmers to produce soybeans, which increases the supply of soybeans and lowers the market price. The subsidy also makes it more profitable for farmers to produce soybeans, which increases their marginal cost of production.

An Effective Subsidy Paid to Soybean Farmers ________ the Market