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:

Informational Social Influence

The influence to accept information from others as evidence about reality, often leading to conformity.

Deindividuation

A psychological state characterized by decreased self-awareness and diminished social identity, leading to uninhibited and sometimes antisocial behavior.

Social Facilitation

This refers to the improved performance on tasks in the presence of others.

Cheerful

Displaying a happy or lighthearted mood or disposition.