Government subsidies on the purchase of fertilizer by farmers result in
A)Higher fixed costs to farmers.
B)Lower costs of production and increased output.
C)Decreased output because variable costs are higher.
D)No change to fixed or variable costs.

Question

Quizplus · Accepted Answer

Government subsidies on the purchase of fertilizer by farmers result in lower costs of production for farmers, as the subsidy reduces the price of fertilizer. This, in turn, can lead to increased output, as farmers are able to afford more inputs to increase production. It does not necessarily affect fixed or variable costs.

Government Subsidies on the Purchase of Fertilizer by Farmers Result