1.2|7 Subsidies Flashcards
1
Q
What is a Subsidy ?
A
A payment from Governments to Firms in exchange fro producing a particular good or service.
2
Q
How are subsidies paid ?
A
Paid per unit produced
3
Q
What is the affect of subsidies on the supply curve ?
A
Shifts right
4
Q
How is subsidy per unit shown on a supply and demand graph ?
A
Vertical distance between supply curve before and after
5
Q
What is the main reason for Subsidies ?
A
Encourage Production
6
Q
What is the effect of a subsidy on price and quantity of a good ?
A
- Price decreases
- Quanitiy Increases
