Explain how a US Subsidy for domestic corn farmers would affect each group in the economy. Benefit from an increased supply/ cheaper corn. However, taxpayer dollars are being used to fund subsidies which may interfere with the production of other products Unfair competition, cannot compete with artificially cheaper corn. Reduces costs of production so they can supply more corn. Benefits from support from US producers, but subsidies are hard to remove creating political and economic difficulties : Foreign Producers : US Government :: Domestic Producers :: Domestic Consumers (US consumers)

00 7 F. PRICE (Dollars per ton) 4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in Honduras. The world price (Pw) of soybeans is $530 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 2. Domestic Demand Domestic Supply 770 740 710 680 650 620 06 P, 530 MacBook Pro Search or type URL 4. 51 9.

Import demand is given by A   by the difference between the demand for a good and the supply of a good in the world market. B   the import quota C   the difference between the domestic demand for a good and the domestic supply for a good. D   the difference between the domestic supply for good and the domestic demand for a good

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