Answer to Question #259621 in Microeconomics for Hini

Question

Many countries subsidize agricultural production. In 2015, the European Union spent about €58 billion on farm subsidies through its Common Agricultural Policy. Countries may also subsidize firms that buy farm products. Assuming that specific subsidies are used, draw a diagram to show how subsidies provided to both farmers and corporate buyers of agricultural products affect the market equilibrium compared to the no-subsidy case. Who gains and who loses?

Answer 1

There will be rise in both the demand and supply of farm products when the  European Union subsidies productions of farm goods and when countries subsidy the consumption of farm products.

Both the farmers and the corporate buyers because of the subsidies.