When Would a Subsidy to Sellers Benefit Buyers More Than

question 82

Multiple Choice

When would a subsidy to sellers benefit buyers more than sellers?

• A) If the buyers are more deserving of the subsidy.
• B) When the demand curve is relatively more elastic than the supply curve.
• C) When the demand curve is relatively less elastic than the supply curve.
• D) Buyers can never benefit more than sellers from a subsidy to sellers.

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Definitions:

Specific Tax

A tax that is levied as a fixed amount per unit of a good or service, rather than a percentage of the price.

Elasticity of Supply

A measure of how much the quantity supplied of a good responds to a change in the price of that good, indicating the flexibility of producers.

Deadweight Loss

An economic inefficiency resulting from the lack of or impossibility to attain equilibrium in the market for a particular good or service.

Tax Revenue

The income generated by the government through the imposition of taxes on goods, services, and income.