Given the following hypothetical data: Growers in the U.S. receive $2 billion pe
ID: 1204330 • Letter: G
Question
Given the following hypothetical data:
Growers in the U.S. receive $2 billion per year in income supports
It costs $40 million to have a high probability of successfully lobbying Congress to continue getting supports
There is the equivalent of 12,000 full time sugar producers
People in the U.S. consume 80 pounds of sugar per year
There are 250,000,000 people in the U.S.
The price of raw sugar for producers is about $.22 /lb in the U.S.
The world price is about $.11/lb
Given these numbers, use the Stigler model (algebra) to show how sugar supports continue. Next, pretend you are with a lobby group that wants to defeat supports. Show in the equation how you could reduce the chance that supports are continued.
Next try to show all of this graphically.
Explanation / Answer
Growers in US recieve $2 billion per years in income supports
$40 million to lobby congress
12,000 full time farmer
People in US consumes 80 pounds per year
250 million people in us
Price of Sugar is $.22/LB in us
World price is $.11/LB in us
The problem is that US citizens are loosing money in 2 ways, First they are giving subsidy to growers then they are getting sugar at much higher price of $.22 per pound so subsidy is actually getting wasted.
250 M * 80 = 20000 million pounds * 0.22 = 4400 or 4.4 billion dollars are spent on buying us sugar
This is purely an employment programme nothing else.
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