A Government Subsidy to the Producers of a Product:
However there are losers in terms of opportunity cost. Cgovernment can improve the allocation of resources by imposing a per-unit tax on Z. Subsidies Learn Economics Governments can either reduce spending elsewhere or raise taxes. . Producer and Consumer Subsidies 1. B increases product supply. A unit subsidy is a specific sum per unit produced which is given to the producer. Although commonly extended from the government the term subsidy can relate to any type of support for example from NGOs or as implicit subsidies. Subsidies come in various forms. If the price of DVD players decreases we can expect that the demand for DVDs will. Determinants of supply 98. Subsidies to producers reduce the marginal cost of supply. B increases product supply. Agovernment can improve the allocation of resources by subsidizing consumers of Z. Economics questions and answers. Reduces product demand D. ...