A subsidy to buyers has been placed in the market in the graph shown.The result is:

Question

Quizplus · Accepted Answer

When a subsidy is placed on the buyers, the demand curve shifts to the right, increasing the quantity of the product bought and sold. However, since the subsidy lowers the price that consumers have to pay, producers may be worse off. But in this case, the graph does not provide enough information to determine whether producers are worse off or not. Therefore, choice A is the best answer.

A Subsidy to Buyers Has Been Placed in the Market