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

question 155

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) buyers will reduce their demand for the product.

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Definitions:

Situational Factors

Refers to external influences that affect an individual's behavior, decision-making, and ability to perform in various situations.

Actor

A person who performs in plays, movies, or television shows.

Knowledge

Information, understanding, or skill that one gets from experience or education.

Matching Hypothesis

The theory suggesting that individuals are more likely to form and succeed in a committed relationship with someone who is equally socially desirable.