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

question 185

Multiple Choice

When a government subsidy is granted to the sellers of a product, buyers 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:

Internal Control

A system of policies and procedures designed by management to safeguard company assets, ensure financial report accuracy, and comply with laws and regulations.

Clearly Establishing

The process of defining or setting precise boundaries, rules, or standards.

Money Orders

Prepaid payment instruments issued for a specified amount, guaranteeing payment to the recipient.

Cashier's Checks

A check issued by a bank, drawn on its own funds rather than on one of its depositor's accounts, ensuring the availability of funds for the payee.