When Government Gives a Subsidy to Buyers of Good X

question 42

Multiple Choice

When government gives a subsidy to buyers of good X, the benefits of the subsidy flow to

• A) the buyers of good X only.
• B) the sellers of good X only.
• C) the buyers and sellers of good x equally.
• D) both the buyers and sellers of good x, and the distribution of the benefits will be dependent on the elasticity of demand and the elasticity of supply.

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Definitions:

Minor

An individual under the legal age of adulthood, whose rights and responsibilities are restricted and partially under the guardianship of parents.

Voidable

A term used in contract law to describe an agreement that remains valid until one party chooses to cancel or void it due to certain defects or circumstances at the time of execution.

Contract

A legally binding agreement between two or more parties that creates mutual obligations enforceable by law.

Disaffirming

The act of rejecting or nullifying an agreement or contract, particularly in the context of legal minors or parties without the capacity to enter into a contract.