Suppose That Good X Is One of the More Heavily

question 155

Multiple Choice

Suppose that good X is one of the more heavily subsidized industries in the United States.Suppose further that as a result of intense lobbying from health-related concerns,Congress repeals the subsidies on good X.Which of the following scenarios would likely occur?

• A) The supply curve for good X would shift rightward,as it would now be cheaper to produce each level of output.
• B) The supply curve for good X would shift leftward,since it would now cost more to produce each level of output.
• C) There would be no shift in the supply curve for good X; subsidies don't affect output.
• D) There would be a movement along the supply curve for good X,but the supply curve would not shift.

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Definitions:

Normal Balance

The side of an account (debit or credit) where increases are recorded, depending on the account type (asset, liability, equity, revenue, expense).

Temporary/Permanent

In accounting, this distinction categorizes accounts based on their persistence; temporary accounts reset each cycle, while permanent accounts carry their end balance into the next period.

Accrued Interest

Interest that has been incurred but not yet paid, often associated with bonds and loans.

Note Payable

A financial liability representing a written promissory note to pay a specific sum of money to another entity on a specific future date or on demand.