Suppose that good X is one of the more heavily subsidized industries in the United States.Suppose further that as a result of intense lobbying from health-related concerns,Congress repeals the subsidies on good X.Which of the following scenarios would likely occur?
A) The supply curve for good X would shift rightward,as it would now be cheaper to produce each level of output.
B) The supply curve for good X would shift leftward,since it would now cost more to produce each level of output.
C) There would be no shift in the supply curve for good X; subsidies don't affect output.
D) There would be a movement along the supply curve for good X,but the supply curve would not shift.

Question

Quizplus · Accepted Answer

When subsidies are repealed, the cost of production increases, making it more expensive for producers to produce each level of output. This would cause a leftward shift in the supply curve for good X, as producers would be willing to supply less of good X at each price level.

Suppose That Good X Is One of the More Heavily