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Suppose the U.S. supply and demand curves for wheat cross at a price of $5 per bushel, but American producers can sell as much wheat
Suppose the U.S. supply and demand curves for wheat cross at a price of $5 per bushel, but American producers can sell as much wheat as they want to on the world market at a price of $8 per bushel. Now suppose the government offers American farmers a subsidy of $1 for every bushel of wheat that they ship abroad. (Wheat sold in the U.S. earns no subsidy.)
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