In 2011, Congress debated the merits of continuing its 41 cents a gallon subsidy paid to ethanol gas refiners (ethanol is produced from corn). A major proponent for renewing the subsidy was the corn growers’ trade association.

a) Using a supply and demand diagram, show why corn growers were so vocal about supporting a subsidy that it was not directly receiving.

b) Using a supply and demand diagram, now show why cereal producers were so supportive of abolishing the subsidy.