Summarize the effects of a subsidy on the market price and the quantity produced
What will be an ideal response?
A subsidy increases the price received by sellers, shifts the supply curve rightward, and places a wedge between the marginal social benefit and marginal social cost of producing the good. The subsidy creates a deadweight loss, a higher equilibrium quantity sold, over-production, and a lower price paid by the consumers. The subsidy increases farm revenues to all farmers.
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The equation of exchange is a(n)
a. identity relating the volume of transactions at current prices to the stock of money times the turnover rate of each dollar. b. "truism" and by itself does not explain the variables it contains. c. identity relating the volume of transactions at base year prices to the stock of money times the turnover rate of each dollar. d. Both a and b e. Both b and c
Using supply and demand to model employment discrimination, if women are legally or socially confined to certain professions such as nursing or teaching, then the wage paid to men in other professions will be ________, and the wage paid to women will be ________.
A. inefficiently low; inefficiently high B. inefficiently high; inefficiently low C. inefficiently high; just right D. inefficiently low; inefficiently low