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© 2009 Pearson Education, Inc. Publishing as Prentice Hall   Principles of Economics 9e by Case, Fair and Oster

General Equilibrium Analysis

The U.S. government provides large subsidies for ethanol, a fuel produced from corn. Proponents of the ethanol subsidies suggest that it is one piece of a policy that can help the United States reduce its dependence on foreign oil. In part as a result of these subsidies, the midwestern United States has seen a large increase in corn production relative to other grains.

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