Whether a subsidy for a certain good is given to a demander or supplier is irrelevant because
A) in either case,the price that the demander has to pay will decrease;while the price the supplier receives will increase
B) in either case,the price that the demander has to pay will increase;while the price the supplier receives will decrease
C) either situation will create excess demand
D) either situation will create excess supply
E) none of these are correct

Question

Quizplus · Accepted Answer

Whether the subsidy is given to the demander or supplier, the result is the same - the price paid by the demander decreases and the price received by the supplier increases. This is because the subsidy effectively lowers the cost of production for the supplier, allowing them to sell the good at a lower price while still making a profit. The demander benefits from this lower price, regardless of who receives the subsidy.

Whether a Subsidy for a Certain Good Is Given to a Demander