If the government subsidizes a product, what is the relationship between the price that buyers pay (P_B) and the price that sellers receive (P_S)? A) P_B + subsidy = P_S B) P_B + P_S = subsidy C) P_B = P_S + subsidy D) P_B (1 + subsidy) = P_S

Question

Quizplus · Accepted Answer

When the government subsidizes a product, the price that buyers pay is less than the price that sellers receive. The difference is made up by the subsidy. Therefore, the price paid by buyers plus the subsidy equals the price received by sellers.

If the Government Subsidizes a Product, What Is the Relationship