The government in a competitive market economy enacts a subsidy to pay farmers for producing milk. Evaluating this policy using the idea of economic efficiency would lead one to conclude that the policy is:

undesirable because it would change the distribution of income.
undesirable because it would encourage too much milk production relative to other commodities.
desirable because it would help consumers through lower milk prices without hurting producers.
desirable because it would help both consumers through lower milk prices and producers through higher profits.


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