The actual benefit of a government subsidy is determined primarily by
A) the elasticities of demand and supply.
B) the legal (or statutory) assignment of the subsidy
C) the number of exchanges that are made possible as a result of the subsidy.
D) whether the subsidy is paid by cash or check.

Question

Quizplus · Accepted Answer

The actual benefit of a government subsidy is determined by the elasticities of demand and supply because these elasticities affect how the subsidy is distributed between consumers and producers. The more inelastic side of the market will receive a larger share of the subsidy benefit.

The Actual Benefit of a Government Subsidy Is Determined Primarily