When a Government Subsidy Is Granted to the Buyers of a Product

question 178

Multiple Choice

When a government subsidy is granted to the buyers of a product, sellers can end up capturing some of the benefit because

• A) the market price of the product will fall in response to the subsidy.
• B) the market price of the product will rise in response to the subsidy.
• C) the market price of the product will not change in response to the subsidy.
• D) producers will reduce the supply of the product.

---

Definitions:

Marketing of Services

Strategies and tactics used to promote and sell intangible services, as opposed to tangible goods.

Delivery Gap

A type of service gap; the difference between the firm’s service standards and the actual service it provides to customers.

Service Standards

The levels of performance and quality that service providers commit to delivering to their customers.

Empowerment

In context of service delivery, means allowing employees to make decisions about how service is provided to customers.