A subsidy to buyers has been placed in the market in the graph shown. The result is:

Question

Quizplus · Accepted Answer

When a subsidy is given to buyers, it decreases the price that buyers pay, which increases the quantity demanded of the good. This leads to a higher quantity bought and sold at a higher price, which is the outcome described in choice A. Option B cannot be correct because if buyers are paying a lower price, they are better off. Option C is also incorrect because producers benefit from the subsidy, as they are able to sell more of their product at a higher price than they would have without the subsidy.

A Subsidy to Buyers Has Been Placed in the Market