In the supply and demand model, a subsidy granted to buyers is illustrated by
A) a downward shift in the demand curve, by the per unit amount of the subsidy.
B) an upward shift in the demand curve, by the per unit amount of the subsidy.
C) a downward shift in the supply curve, by the per unit amount of the subsidy.
D) an upward shift in the supply curve, by the per unit amount of the subsidy.

Question

Quizplus · Accepted Answer

A subsidy to buyers increases their willingness to pay, shifting the demand curve upward by the amount of the subsidy.

In the Supply and Demand Model, a Subsidy Granted to Buyers