A Subsidy

question 112

Multiple Choice

A subsidy:

• A) has the same impact on a market as a tax.
• B) has a larger impact on a market than a tax of the same amount.
• C) has a smaller impact on a market than a tax of the same amount.
• D) is the reverse of a tax.

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Definitions:

Horizontal Axis

In a graph or chart, it is the x-axis, representing the independent variable.

Equilibrium Quantity

Equilibrium quantity is the quantity of goods or services that is supplied and demanded at the equilibrium price, where the quantity supplied equals the quantity demanded.

Cross Elasticity

A measure of the responsiveness of the demand for one good to a change in the price of another good.

Soft Drinks

Carbonated, non-alcoholic beverage options often flavored with various sweeteners, fruits, or other flavorings.