Which of the following statements is TRUE regarding subsidy?
A)A subsidy causes the value of goods to exceed the cost of producing the goods.
B)A subsidy reduces deadweight loss of non-beneficial trade.
C)A subsidy means that the sellers receive less than buyers pay.
D)Suppliers receive more benefit of a subsidy if the elasticity of supply is less than the elasticity of demand.(True Answer
)Correct

Question

Quizplus · Accepted Answer

Suppliers receive more benefit of a subsidy if the elasticity of supply is less than the elasticity of demand. This is because a less elastic supply means that the suppliers have less flexibility to increase the quantity supplied in response to an increase in price, and therefore benefit more from the subsidy.

Which of the Following Statements Is TRUE Regarding Subsidy