Canadian wheat farmers produced so much wheat over the last season that wheat prices plummeted. The government tried to boost wheat prices by offering farmers who agreed not to harvest 20 percent of their wheat field compensation up to a specified maximum per farm. The Canadian government’s program, if successful, will not be a net burden on the budget. Which of the following, if true, is the best basis for an explanation of how this could be so?
A. If prices were allowed to remain low, the farms would be operating at a loss, causing the government to lose tax revenue on farm profits.
B. Wheat production in several countries declined the year that the compensation program went into effect in Canada.
C. The first year that the compensation program was in effect, wheat acreage in Canada was 5% below its level in the base year for the program.
D. The specified maximum per farm meant that for very large wheat farms the compensation was less per acre for those acres than they were for smaller farms.
E. Farmers who wished to qualify for compensation program could not use the land not harvested for wheat to grow another crop.
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