If policy-makers want gasoline to be produced from corn-based ethanol, why would they have to subsidize it? a) because automobiles run better on gasoline produced from ethanol
b) because food prices are lower when gasoline is produced from corn-based ethanol
c) because gasoline would not be produced if it was not subsidized
d) because it is costlier to produce gasoline from corn-based ethanol than from petroleum

d) because it is costlier to produce gasoline from corn-based ethanol than from petroleum

Explanation:

Government subsidize certain industries because they want to increase the production and consumption of specific goods or services. In this case, if the government wants to increase the production of gasoline produced from ethanol, it must enable ethanol producers to be able to make a profit while selling their product. Or the government might subsidize the consumers by lowering the selling price, which would encourage more consumers to use ethanol based gasoline.

The whole reasoning behind the government having to subsidize either the producers or consumers of ethanol based gasoline is that the costs of producing it are higher than the costs of producing oil based gasoline. If it wasn't so, there would be no reason to subsidize it, the market would act by itself.

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