Subsidies, unlike taxes, tend to increase the quantities of goods and/or services traded and consumers tend to pay a lower price for the good. From this perspective, the benefits for consumers are evident, while the effects for producers are not so conclusive. In this context, what would be the effect(s) that subsidies have on producers? I. Subsidies positively affect the quantity supplied, but the producer must pay the subsidy. II. Market prices increase. III. Producers increase the quantity offered, but the price they charge is the one that corresponds according to their supply function. Select one: a. II and III b. III only c. I, II and III d. I and III e. I only

Subsidies, unlike taxes, tend to increase the quantities of goods and/or services traded and consumers tend to pay a lower price for the good. From this perspective, the benefits for consumers are evident, while the effects for producers are not so conclusive. In this context, what would be the effect(s) that subsidies have on producers? I. Subsidies positively affect the quantity supplied, but the producer must pay the subsidy. II. Market prices increase. III. Producers increase the quantity offered, but the price they charge is the one that corresponds according to their supply function. Select one: a. II and III b. III only c. I, II and III d. I and III e. I only

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter6: Demand And Elasticity

Section: Chapter Questions

Problem 3TY

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