If a $50 subsidy is legally (statutorily) granted to the sellers of exercise equipment and as a result the price of exercise equipment to consumers falls by $30, the actual benefit of the subsidy
A) goes completely to buyers of exercise equipment.
B) goes completely to sellers of exercise equipment.
C) is $30 to buyers and $20 to sellers.
D) is $20 to buyers and $30 to sellers.

Question

Quizplus · Accepted Answer

The price to consumers falls by $30, indicating that buyers receive a $30 benefit. The remaining $20 of the $50 subsidy goes to the sellers, as they receive the subsidy but only pass on $30 of it to consumers.

If a $50 Subsidy Is Legally (Statutorily) Granted to the Sellers