The difference between a tax and a subsidy is that when the government places a tax on a good,it ________ the equilibrium price and ________ the equilibrium quantity,whereas when the government places a subsidy on a good,it ________ the equilibrium price and ________ the equilibrium quantity.

Question

Quizplus · Accepted Answer

A tax increases the equilibrium price and decreases the equilibrium quantity, while a subsidy decreases the equilibrium price and increases the equilibrium quantity.

The Difference Between a Tax and a Subsidy Is That