Tobacco Production Is One of the More Heavily Subsidized Industries

question 57

Multiple Choice

Tobacco production is one of the more heavily subsidized industries in the United States.Suppose that as a result of intense lobbying from health-related concerns,Congress repeals the tobacco firms' subsidies.Which of the following scenarios would likely occur?

• A)The tobacco firms' supply curve would shift rightward,as it would now be cheaper to produce each level of output.
• B)The tobacco firms' supply curve would shift leftward,since it would now cost more to produce each level of output.
• C)The tobacco firms would not experience any shift in their supply curves;subsidies don't affect output.
• D)There would be a movement along the supply curve for tobacco,but the supply curve would not shift.

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