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.

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Definitions:

Diaphragm

A barrier method of contraception that is placed inside the vagina to cover the cervix and prevent sperm from entering the uterus.

Oral Contraceptives

Pills taken orally to inhibit fertility, typically by preventing ovulation or by altering conditions in the uterus.

Vaginal Rings

Flexible, doughnut-shaped rings placed inside the vagina to deliver hormones for contraception or to address hormonal imbalances.

Cervical Caps

Cervical caps are contraceptive devices that fit over the cervix to prevent sperm from entering the uterus, thereby preventing pregnancy.