13-Subsidy

Question 1

Define Subsidy

Answer 1

It is a Grant Provided by the Government to producer to Reduce their Cost of Production and Increase their Supply

Question 2

State the How the PED of a good related to the Consumer’s Benefit to the Subsidy

Answer 2

If Demand is PRICE INELASTIC then the market price falls by a Relatively Large Amount Increasing the Benefit to Consumer of Subsidy