6. Introduction to Taxes and Subsidies
Subsidies
Multiple Choice
Multiple ChoiceThe government wants to help producers of a life-saving machine, so they introduce a $1,000 subsidy per machine produced. Assuming that demand for this machine is inelastic, the subsidy will:
A
Increase the price paid by consumers by $1,000
B
Increase the price paid by consumers by less than $1,000
C
Decrease the price paid by consumers by less than $1,000
D
Have no effect on the price paid by consumers
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