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When a Government Subsidy Is Granted to the Buyers of a Product

Question 115

Multiple Choice

When a government subsidy is granted to the buyers of a product, sellers can end up capturing some of the benefit because


A) the market price of the product will fall in response to the subsidy.
B) the market price of the product will rise in response to the subsidy.
C) the market price of the product will not change in response to the subsidy.
D) buyers will reduce their demand for the product.

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