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:

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts, as well as the physical factors of production including machinery, buildings, and land.

Labor

The contribution of human physical and mental energies in the fabrication of goods and the supply of services.

Technological Change

The development and application of new processes, tools, and machines, leading to more efficient production methods.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.