Suppose France subsidizes French wheat farmers,while Germany offers no subsidy to German wheat farmers.As a result of the French subsidy,sales of French wheat to Germany
A)may prompt German farmers to invoke the unfair-competition argument.
B)increase the consumer surplus of German buyers of wheat.
C)increase the total surplus of the German people.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The French subsidy makes French wheat cheaper, potentially leading German farmers to claim unfair competition (A). German consumers benefit from lower prices, increasing their consumer surplus (B). The overall economic welfare in Germany may increase due to cheaper imports, thus increasing total surplus (C).

Suppose France Subsidizes French Wheat Farmers,while Germany Offers No Subsidy