Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
They lower the price of the good for consumers.
B
They increase the demand for the good regardless of price.
C
They have no effect on the supply of the good.
D
They decrease the quantity supplied of the good.
Understanding the Answer
Let's break down why this is correct
Answer
Government subsidies are financial support provided by the government to help lower the cost of producing a specific good. This makes the good cheaper for consumers, which can lead to an increase in demand. For example, if the government gives farmers subsidies to grow corn, they can sell corn at a lower price. When people see that corn is cheaper, they are more likely to buy it, which can increase sales and encourage farmers to produce more. Overall, subsidies can help make certain goods more affordable and accessible to everyone.
Detailed Explanation
Subsidies help lower the cost of making a good. Other options are incorrect because Some might think subsidies always make people want more of a good; It's a common mistake to think subsidies don't change supply.
Key Concepts
Subsidies
Topic
Effects of Taxes and Subsidies
Difficulty
easy level question
Cognitive Level
understand
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