A subsidy on a product will generate more actual benefit for producers (and less for consumers) when
a. the supply of the product is relatively inelastic.
b. the supply of the product is relatively elastic.
c. the demand for the product is relatively inelastic.
d. either b or c is true
A
You might also like to view...
The nice thing about a pollution tax is that it
a. eliminates pollution b. forces cleanup to occur c. is imposed only on the market with the externality d. creates new property rights e. creates positive externalities to compenstate for negative externalities
Suppose a fishing boat currently brings 10,000 fish to market and earns a profit of $40,000 when the price of fish is $8 . Suppose the boat dealer had overcharged the boat owner for the boat. Upon receiving a refund of $25,000 from the dealer, what will happen to the ATC of producing 10,000 fish?
a. increases by $25 b. increases by $2.50 c. does not change d. decreases by $2.50 e. decreases by $25