Who benefits from a subsidy to buyers?

Question

Quizplus · Accepted Answer

The benefit of a subsidy to buyers can be shared between the buyers and the sellers depending on the elasticity of the supply and demand curves. If the demand curve is relatively elastic compared to the supply curve, buyers will receive a larger share of the benefits through lower prices. If the supply curve is relatively elastic compared to the demand curve, sellers will receive a larger share of the benefits through higher prices. If the curves are relatively inelastic, the benefits will be shared more equally. Therefore, choice C is the best answer.

Who Benefits from a Subsidy to Buyers