1.4 In an effort to support the price of raw milk and dairy products, some dairy farmers advocate a subsidy in cash for every cow that they leave “unused”. They argue that the subsidy increases the “cost” of dairy farming and that it will reduce supply and increase the price of competitively produced dairy products. Critics argue that because the subsidy is a payment to dairy farmers, it will reduce costs and lead to lower prices. Which argument is correct?

Explain.