Econ mc ~easy~

Question

Suppose the government gives out subsidies to Good X. The producers share no part of the subsidy benefits if

A. the demand for Good X is perfectly elastic

B. the demand for Good X is perfectly inelastic

C. the supply of Good X is perfectly elastic

D. the supply of Good X is perfectly inelastic

Why ans 唔可以係C ge ??

Answer 1

最愛解答

First, the government gives out subsidies to good x, so the supply of good x will increase as the cost of production will fall. thus, C and D must not be the correcr answer.

The answer should be B. If the demand is PERFECTLY INELASTIC, the consumers will enjoy the whole susidy benefit. And the price of good x will fall.

Answer A is wrong, if the demand is perfectly elastic, the producers will enjoy the whole subsidy benefit. The price will remain unchanged.

資料來源： myself