Suppose that a subsidy is provided for the consumption of good ABC,and the subsidy is different for different units of good ABC (e.g.,$10 subsidy on the first unit of good ABC and $7 on the second unit of good ABC,etc.).The demand curve with such a subsidy will lie to the ______________ of the demand curve without a subsidy,__________ parallel to the demand curve without any subsidy.
A) left; but will not be
B) left; and will be
C) right; and will be
D) right; but will not be

Question

Quizplus · Accepted Answer

The demand curve with a subsidy will lie to the right of the demand curve without a subsidy because the subsidy effectively lowers the price of the good, increasing the quantity demanded. However, since the subsidy amount changes with different units, the shift will not be parallel, as the price reduction varies across different quantities.

Suppose That a Subsidy Is Provided for the Consumption of Good