Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 17 - Asymmetric Information, Voting, and Public Choice - Problems - Page 372: 2c

Answer

Beet farm average subsidies: ${$18,750}$ Sugarcane farm average subsidies: ${$1,875,000}$

Work Step by Step

Each small group gets half of the ${$75,000,000}$ allocated in subsidies. So, each group gets ${$37,500,000}$. For each of 2000 beet farms that each receives in subsidies, that can be found with the following: $\frac{$37,500,00}{2000}$ = ${$18,750}$ Again, for each of 20 sugarcane farms that each receives in subsidies, that can be found with the following: $\frac{$37,500,00}{20}$ = ${$1,875,000}$
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