If the Federal Government Began Granting a Subsidy of 10

question 200

Multiple Choice

If the federal government began granting a subsidy of 10 cents per apple to apple growers and as a result the price of apples to consumers falls by 8 cents,

• A) the actual benefit of this subsidy goes mostly to consumers.
• B) the actual benefit of this subsidy goes mostly to producers.
• C) the actual benefit of this subsidy would be shared equally by producers and consumers.
• D) nobody would benefit from the subsidy.

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Definitions:

Normal Balance

The side of an account (debit or credit) that is expected to have a higher balance based on the accounting equation.

Asset Account

An account on a balance sheet representing tangible or intangible items of value owned by a company.

Trial Balance

A ledger balance sheet summarizing all accounts, showing equal totals for both credit and debit columns.