Question

There are some government programs that pay farmers not to plant wheat on part of their land.
This would help farmers:

A) by increasing total revenue but it hurts consumers.
B) by increasing prices for wheat by increasing total revenue and it also helps consumers by lowering the price of wheat.
C) since the government payment will reduce the costs of production and increase the supply of wheat.
D) since the government payment will increase income to farmers and it helps consumers too by lowering the price of wheat.

Answer 1

Answer:

Option D                                

Explanation:

In simple words, the payment by government will work as a subsidy for the lost profits of the farmers and their income will be ineffective. Also, by not using that land the farmers can grow any other crop which can provide them higher income as compared to crops.

Such step will result in higher total revenue as wheat would not get wasted due to extra production, thus consumers will also not  get hurt.