Effect of a Producer Subsidy on Surplus
In a perfectly competitive market, what is the effect of a government subsidy granted to producers on consumer surplus and producer surplus?
A
It has no effect on consumer or producer surpluses because subsidies do not alter market equilibria in competitive markets.
B
It increases both consumer and producer surplus due to lower equilibrium prices and increased quantity.
C
It increases consumer surplus but decreases producer surplus as the market price falls below the cost of production.
D
It decreases both consumer and producer surplus due to higher equilibrium prices and decreased quantity.
Question Leaderboard
| Rank | |||||
|---|---|---|---|---|---|
| #1 | tim14032009 | 1 | 1 | 0m 00s | 100 |
| #2 | sudhakarrsurya216 | 1 | 1 | 0m 15s | 85 |
| #3 | omarhalabi1971 | 1 | 1 | 0m 28s | 72 |
| #4 | sophia.pederson08 | 1 | 1 | 0m 30s | 70 |
| #5 | prishaprishaprisha | 1 | 1 | 0m 36s | 64 |
| #6 | dagyeom0418 | 1 | 1 | 0m 46s | 54 |
| #7 | eftahsam | 1 | 1 | 1m 42s | -2 |
| #8 | Demeyl.28 | 1 | 2 | 2m 00s | -30 |
| #9 | architvishwakarma72 | 0 | 1 | 0m 21s | -31 |
| #10 | babypandapro2 | 1 | 2 | 2m 16s | -46 |
Items per page:
10
1 – 10 of 16