_9. Farmers in the arid western states buy water from the government at prices well below the government's cost of supplying the water. Farmers, many of whom are wealthy, say they do not benefit from the subsidy and that it is passed on to the consumer in the form of lower prices. The economic assumption underlying their argument is that a. consumers know about the subsidies, so they demand lower prices and usually get them. b. Congress sets up price ceilings as a part of the subsidy program, which limits abuse. c. demand is very inelastic in these markets, so consumers pay less for total food costs. d. producers know Congress intends to help the consumer with the subsidy so they lower prices out of a sense of fairness. e. demand for food is elastic, and a drop in price reduces total food costs for consumers. _10. Management of a firm believes that income elasticity for a particular product is .25. Suppose that a recession reduces area income by 7.5%. How much will unit sales change? a. Unable to determine from the data given. b. Decrease by 7.5%. c. Decrease by 1.88%. d. Increase by 1.88%. e. Increase by 7.5%