Who benefits from a subsidy to buyers?

Question

Quizplus · Accepted Answer

Buyers benefit from a lower price, and sellers benefit from increased demand, depending on the elasticity of their respective curves. The subsidy helps to reduce the price of the product to the buyers, and thus, there is likely to be an increase in the quantity demanded. The degree to which sellers benefit depends on the elasticity of their supply curve; if their curve is highly inelastic, then they will benefit primarily from the subsidy. However, if their curve is highly elastic, then buyers will benefit more, and there will be less overall benefit to the sellers.

Who Benefits from a Subsidy to Buyers