A $10 per unit government subsidy paid directly to sellers of heaters will result in
A) a downward shift in the demand curve for heaters by $10.
B) an upward shift in the demand curve for heaters by $10.
C) a downward shift in the supply curve for heaters by $10.
D) an upward shift in the supply curve for heaters by $10.

Question

Quizplus · Accepted Answer

A subsidy to sellers decreases their costs, effectively shifting the supply curve downward by the amount of the subsidy.

A $10 Per Unit Government Subsidy Paid Directly to Sellers