Author Question: Summarize the effects of a subsidy on the market price and the quantity produced. What will be an ... (Read 48 times)

Lisaclaire

  • Hero Member
  • *****
  • Posts: 569
Summarize the effects of a subsidy on the market price and the quantity produced.
 
  What will be an ideal response?

Question 2

A(n) ________ is represented by a leftward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve.
 
  A) increase in demand; decrease in quantity demanded
  B) decrease in demand; increase in demand
  C) decrease in demand; increase in quantity demanded
  D) decrease in quantity demanded; decrease in demand


polinasid

  • Sr. Member
  • ****
  • Posts: 344
Answer to Question 1

A subsidy increases the price received by sellers, shifts the supply curve rightward, and places a wedge between the marginal social benefit and marginal social cost of producing the good. The subsidy creates a deadweight loss, a higher equilibrium quantity sold, over-production, and a lower price paid by the consumers. The subsidy increases farm revenues to all farmers.

Answer to Question 2

C



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

All adults should have their cholesterol levels checked once every 5 years. During 2009–2010, 69.4% of Americans age 20 and older reported having their cholesterol checked within the last five years.

Did you know?

Pregnant women usually experience a heightened sense of smell beginning late in the first trimester. Some experts call this the body's way of protecting a pregnant woman from foods that are unsafe for the fetus.

Did you know?

Complications of influenza include: bacterial pneumonia, ear and sinus infections, dehydration, and worsening of chronic conditions such as asthma, congestive heart failure, or diabetes.

Did you know?

Pubic lice (crabs) are usually spread through sexual contact. You cannot catch them by using a public toilet.

Did you know?

There are more nerve cells in one human brain than there are stars in the Milky Way.

For a complete list of videos, visit our video library