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

question 155

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) buyers will reduce their demand for the product.

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Definitions:

Performance Advantage

The superiority that an individual or organization holds over competitors in terms of operational efficiency, effectiveness, and overall performance.

Total Quality Management

A comprehensive and continuous effort by an organization to improve the quality of its products, services, and processes through ongoing feedback and development.

Continuous Improvement

Continuous Improvement is an ongoing effort to improve products, services, or processes through incremental and breakthrough improvements, often influenced by methodologies like Lean and Six Sigma.

Customer Needs

The wants and requirements that customers express to fulfill a certain function or solve a problem through the purchase or use of a product or service.