A. the demand curve to the left B. the supply curve to the right C. both the supply demand curves to the left D. supply curve to the left and demand curve to the right
Correct Answer: B
Explanation
Subsidy impact. Marginal subsidies on production will shift the supply curve to the right until the vertical distance between the two supply curves is equal to the per unit subsidy; when other things remain equal, this will decrease price paid by the consumers (which is equal to the new market price) and increase the price received by the producers.
