If farmers expect the government to increase subsidies on corn grown next year for ethanol production, we should not be surprised to observe

Question

Quizplus · Accepted Answer

If farmers anticipate increased subsidies for corn grown for ethanol production next year, they are likely to allocate more resources towards corn production to take advantage of the expected financial benefits. This shift in focus towards corn may result in a decrease in the production of other crops, such as wheat, as farmers reallocate land and resources away from these crops and towards corn.

If Farmers Expect the Government to Increase Subsidies on Corn