A subsidy is a:
A) reverse tax.
B) means of shifting the supply curve left.
C) form of tax benefit.
D) movement along the supply curve.

Question

Quizplus · Accepted Answer

A subsidy is a payment made by the government to producers or consumers in order to encourage the production or consumption of a certain good or service. It is essentially a negative tax, where the government pays money instead of collecting it. This is why it is considered a reverse tax, making choice A the correct answer.

A Subsidy Is A