Explain why the government might choose to grant a subsidy to producers of wheat.

A subsidy is an amount of money paid by the government to a firm. There are many reasons why the government might choose to subsidize producers of wheat.

In many countries, wheat is considered to be an essential good. The government would therefore hope for consumption of wheat to increase, which can be achieved through lower prices. If a subsidy is granted to producers of wheat, their costs of production will be lowered. Producers ca...

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