Consumers may benefit more than sellers from a subsidy to sellers if:

Name: Consumers may benefit more than sellers from a subsidy to sellers if:
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When the demand curve is relatively more elastic than the supply curve, a greater portion of the subsidy is passed on to consumers in the form of lower prices, resulting in a larger increase in consumer surplus than the decrease in producer surplus. Therefore, consumers benefit more than sellers from the subsidy.

Consumers May Benefit More Than Sellers from a Subsidy to Sellers