A __________ subsidy is a one-time payment made by the government to firms, while a per unit subsidy incentivizes increased output by providing payments for each unit produced.

A one-time payment made by the government to firms is called a lump-sum subsidy. This type of subsidy helps businesses cover initial costs or support them during tough times without directly linking the payment to how much they produce. On the other hand, a per unit subsidy gives businesses money for each item they produce, encouraging them to make more goods. For example, if a factory receives a lump-sum subsidy of $10,000, it can use that money however it wants, while a per unit subsidy of $2 per widget produced would motivate the factory to increase its production to earn more money. Both types of subsidies aim to support businesses but do so in different ways.