Subsidies Flashcards
1
Q
define subsidies?
A
grants given by government to encourage production or consumption of a particular good
2
Q
give an example(s) of a subsidy
A
- farm foods are often subsidised to encourage home grown produce
- giving firms money to hire disadvantaged workers e.g. those with with disabilities
3
Q
what does a subsidy tend to do?
A
increase the willingness of suppliers to supply a good
4
Q
what do subsidies result in? why?
A
driving down the price & increasing the quantity - balancing it out os it doesn’t affect their profits
5
Q
what do subsidies do to supply and the supply curve?
A
increase supply, shift supply curve down(to the right)
6
Q
What do subsidies do to price ?
A
increase it
