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.

---

Definitions:

Variable Manufacturing Costs

Expenses that change in proportion to the manufacturing output, including costs related to direct labor, materials, and manufacturing overhead that fluctuates with production volume.

Operating Income

Earnings from a company's core business operations, excluding expenses and revenues from non-operating activities.

Fixed Overhead

The set costs associated with operating a business that does not change in relation to production volume, such as rent, salaries, and insurance.

Administrative Costs

Expenses related to the general operations of a business, such as office supplies, management salaries, and utilities, which do not directly tie to specific product or service production.