A ________ creates a situation in which the price received by sellers ________ the price paid by buyers.
A) tax; exceeds
B) tax; equals
C) subsidy; is less than
D) subsidy; exceeds

Question

Quizplus · Accepted Answer

A subsidy is a government payment to a producer or consumer. It is designed to encourage the production or consumption of a particular good or service. A subsidy creates a situation in which the price received by sellers exceeds the price paid by buyers.

A ________ Creates a Situation in Which the Price Received