-In the above figure, if a Medicare subsidy that had previously been paid by the government has now been eliminated, the result will be
A) an increase in the price received by producers, from P0 to Ps.
B) a decrease in the price received by producers, from Ps to P0.
C) an increase in the price paid by consumers, from P0 to Ps.
D) a decrease in the price paid by consumers, from Ps to P0.

Question

-In the above figure, if a Medicare subsidy that had previously been paid by the government has now been eliminated, the result will be
A) an increase in the price received by producers, from P0 to Ps. 
B) a decrease in the price received by producers, from Ps to P0. 
C) an increase in the price paid by consumers, from P0 to Ps. 
D) a decrease in the price paid by consumers, from Ps to P0.

Quizplus · Accepted Answer

When a subsidy is eliminated, the price received by producers decreases because they no longer receive the additional payment from the government, moving from Ps to P0.

-In the Above Figure, If a Medicare Subsidy That Had