Question

A government subsidy does not: - increase market efficiency. - affect both producers and consumers in the market. - cause a difference between the price received by sellers and the price paid by buyers. - cause a deadweight loss in the market.

Answer 1

affect both producers and consumers in the market.

Step-by-step explanation:

• A subsidy is a type of government initiative in the form of financial aid or support with the aim of promoting the economic and the social policy of the country.

• They are in various forms like the tax rebated and insurances and lower interest loans etc. Thus affecting both the producers and the consumers as they commonly reduce the prices of goods and services for the consumers.

• Production subsidy, export subsidy import subsidy, consumption subsidy, and the employment subsidy are done to produce more growth and opportunities in the market.