If the elasticity of demand is much greater than the elasticity of supply,a subsidy awarded to demanders will
A)benefit the demanders more than the suppliers
B)benefit the suppliers more than the demanders
C)the benefit of the subsidy will be equally shared between the demanders and the suppliers
D)allow the demanders to be the only ones who will benefit
E)Without more information as to the amount of the subsidy,who will benefit more can not be determined

Question

Quizplus · Accepted Answer

When demand is more elastic than supply, suppliers will benefit more from a subsidy because they are less responsive to price changes, capturing more of the subsidy.

If the Elasticity of Demand Is Much Greater Than the Elasticity