Who wins-who loses under wheat tax versus subsidy

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Who wins, who loses under a wheat tax versus a subsidy?

How does the deadweight loss of the tax compare to the deadweight loss of a price support subsidy?

Why, in social welfare terms, is a tax a better than a subsidy?

To what extent does a price support help achieve our goal of fixing the negative externality?

There may be other reasons, in general, for preferring a tax rather than a subsidy. For instance, what are some general problems we might encounter with a wheat subsidy that we wouldn’t get with a wheat tax?

Reference no: EM131093119

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