If the federal government began granting a subsidy of 10 cents per apple to apple growers and as a result the price of apples to consumers falls by 8 cents,
A) the actual benefit of this subsidy goes mostly to consumers.
B) the actual benefit of this subsidy goes mostly to producers.
C) the actual benefit of this subsidy would be shared equally by producers and consumers.
D) nobody would benefit from the subsidy.

Question

Quizplus · Accepted Answer

The price to consumers falls by 8 cents, which means consumers receive most of the benefit from the 10-cent subsidy, as they pay less for apples.

If the Federal Government Began Granting a Subsidy of 10