If a $50 Subsidy Is Legally (Statutorily) Granted to the Sellers

question 226

Multiple Choice

If a $50 subsidy is legally (statutorily) granted to the sellers of exercise equipment and as a result the price of exercise equipment to consumers falls by $30, the actual benefit of the subsidy

• A) goes completely to buyers of exercise equipment.
• B) goes completely to sellers of exercise equipment.
• C) is $30 to buyers and $20 to sellers.
• D) is $20 to buyers and $30 to sellers.

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Definitions:

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the ownership interest of the business owners.

Cash Withdrawals

The act of taking money out of an account, decreasing the account balance.

Assets

Resources owned or controlled by a company or individual with the expectation that they will provide future benefit.

Accounting Equation

A fundamental financial principle representing the relationship between a company's assets, liabilities, and shareholder's equity: Assets = Liabilities + Equity.