-In the above figure, if a Medicare subsidy that had previously been paid by the government has now been eliminated, the result will be
A)an increase in the price received by producers, from P₀ to Ps.
B)a decrease in the price received by producers, from Ps to P₀.
C)an increase in the price paid by consumers, from P₀ to Ps.
D)a decrease in the price paid by consumers, from Ps to P₀.

Question

-In the above figure, if a Medicare subsidy that had previously been paid by the government has now been eliminated, the result will be
A)an increase in the price received by producers, from P₀ to Ps. 
B)a decrease in the price received by producers, from Ps to P₀. 
C)an increase in the price paid by consumers, from P₀ to Ps. 
D)a decrease in the price paid by consumers, from Ps to P₀.

Quizplus · Accepted Answer

The elimination of the Medicare subsidy will reduce the amount of money that producers receive for their products. This will lead to a decrease in the price received by producers, from Ps to P₀.

-In the Above Figure, If a Medicare Subsidy That Had