A subsidy paid to producers ?
Correct answer: A. Shifts the supply curve
- A. Shifts the supply curve
- B. shifts the demand curve
- C. Leads to a contractions in supply
- D. Leads to an extension of supply
Explanation
A producer subsidy lowers the effective cost of supplying each unit, shifting the supply curve rightward. It is not merely an extension of supply, which would result from a change in the good's own price.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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