Which of the following statements is correct?
A)If the elasticity of demand is greater than the elasticity of supply, sellers will receive more of the subsidy.(True Answer
)Correct
B)If the elasticity of demand is greater than the elasticity of supply, sellers will receive less of the subsidy.
C)If the elasticity of demand is less than the elasticity of supply, sellers will receive more of the subsidy.
D)If the elasticity of demand is greater than the elasticity of supply, buyers will receive more of the subsidy.

Question

Quizplus · Accepted Answer

If the elasticity of demand is greater than the elasticity of supply, it means that buyers are more responsive to changes in price than sellers. So, when a subsidy is given, buyers will demand more at the lower price, but sellers won't increase supply as much, resulting in sellers receiving more of the subsidy.

Which of the Following Statements Is Correct