Does a Subsidy to Buyers Affect the Supply Curve

question 10

Multiple Choice

Does a subsidy to buyers affect the supply curve?

• A) Yes, it shifts supply up by the amount of the subsidy.
• B) Yes, it shifts supply to the right by the amount of the subsidy.
• C) No, the quantity supplied will increase, but the supply curve does not move.
• D) No, the quantity supplied will decrease, but the supply curve does not move.

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Definitions:

Coupon

A voucher or code that entitles the holder to a discount off a particular product or service, or a certificate of interest payment on a bond.

Marginal Cost

The expense associated with manufacturing or providing an additional unit of an item or service.

Marginal Benefit

The additional satisfaction or utility gained by consuming one more unit of a good or service.

Diamond

A precious gemstone formed from carbon under high pressure and temperature, valued for its brilliance, clarity, and rarity.