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Use the following figure, which shows the market for tomatoes, to work Problems 19 and 20. 6.3-5 Full Alternative Text If the government subsidizes growers

Use the following figure, which shows the market for tomatoes, to work Problems 19 and 20.

6.3-5 Full Alternative Text If the government subsidizes growers at $4 a kilogram, what is the quantity produced, the quantity demanded, and the subsidy paid to growers?

If the government subsidizes tomato growers at $4 a kilogram, who gains and who loses from the subsidy? What is the deadweight loss? Could the subsidy be regarded as being fair?

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12 10 Price (dollars per kilogram] 8 A 2 2 3 4 5 Quantity (billions of kilograms per year)

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