Farm programs such as those of the United States and the European Union cause a misallocation of international agricultural resources primarily because

Question

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Farm programs such as those of the United States and the European Union cause a misallocation of international agricultural resources primarily because they distort domestic and world agricultural prices. This distortion leads to an inefficient allocation of resources, as farmers who receive subsidies may produce more than necessary for the market, leading to a surplus that cannot be sold at competitive prices. This, in turn, leads to a reduction in profits for farmers who do not receive subsidies, which can discourage them from producing crops that may be more profitable if not for this distortion in prices.

Farm Programs Such as Those of the United States and the European