Refer to the above figure.In the absence of a subsidy,
A)Qd would be demanded and would be supplied.
B)the price Pd would be charged and quantity demanded.
C)the quantity Qo and price Po would prevail in the market.
D)None of the above is correct.

Question

Refer to the above figure.In the absence of a subsidy,
A)Qd would be demanded and would be supplied. 
B)the price Pd would be charged and quantity demanded. 
C)the quantity Qo and price Po would prevail in the market. 
D)None of the above is correct.

Quizplus · Accepted Answer

In the absence of a subsidy, the equilibrium quantity and price (Qo and Po) would prevail in the market where the quantity demanded and supplied are equal. Therefore, choice C is the correct answer. Choices A and B are incorrect because they imply a shift in either the demand or supply curve, which is not implied in the question. Choice D is incorrect because there is a well-defined equilibrium without a subsidy.

Refer to the Above Figure