In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1)the demand (D)for, or supply (S)of, X; (2)the equilibrium price (P)of X; and (3)the equilibrium quantity (Q)of X.Removing the subsidy placed on product X years ago will

Question

Quizplus · Accepted Answer

Removing the subsidy on product X will make it more expensive for producers to produce, leading to a decrease in supply (S). This decrease in supply, with demand remaining constant, will lead to an increase in the equilibrium price (P) of X. As the price increases, the quantity demanded (Q) will decrease, following the law of demand.

In the Following Question You Are Asked to Determine, Other