Subsidies, unlike taxes, tend to increase the quantities of goods and/or services traded and consumers tend to pay a lower price for the good. From this perspective, the benefits for consumers are evident, while the effects for producers are not so conclusive. In this context, what would be the effect(s) that subsidies have on producers? I. Subsidies positively affect the quantity supplied, but the producer must pay the subsidy. II. Market prices increase. III. Producers increase the quantity offered, but the price they charge is the one that corresponds according to their supply function. Select one: a. II and III b. III only c. I, II and III d. I and III e. I only
Subsidies, unlike taxes, tend to increase the quantities of goods and/or services traded and consumers tend to pay a lower
From this perspective, the benefits for consumers are evident, while the effects for producers are not so conclusive. In this context, what would be the effect(s) that subsidies have on producers?
I. Subsidies positively affect the quantity supplied, but the producer must pay the subsidy.
II. Market prices increase.
III. Producers increase the quantity offered, but the price they charge is the one that corresponds according to their supply function.
Select one:
a. II and III
b. III only
c. I, II and III
d. I and III
e. I only
A subsidy given by the government to individuals or institutions. It is a form of financial support from the government entity to protect the welfare of society. The product price lowers after subsidy, This is a non-planned expenditure of the government. It will achieve economic efficiency by offsetting market failure and externalities.
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