Explain Why the Government Might Choose to Grant a Subsidy to Producers of Wheat. Essay Example

contain a lot of employment, in the form of farmers, etc. If the industry were to collapse, there would be many economic and social problems. As a result, the government might choose to grant a subsidy to producers of wheat in order to support the industry. The government might also choose to grant a subsidy to producers of wheat in order to make them more competitive. By providing a subsidy, the government allows producers to achieve lower costs of production.

Producers can then in turn lower their prices, and therefore hold their own more easily against foreign competitors. In conclusion, the government might choose to grant a subsidy to producers of wheat for several reasons. Because wheat is generally regarded as a necessity, the government will want to encourage its consumption by supporting its producers. This will result in decreased market price, as well as increased market demand.