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"if supply is relatively elastic compared to demand in an efficient market, then we know that a production subsidy will"

User Jmaurier
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If supply is relatively elastic compared to demand in an efficient market, then we know that a production subsidy will benefit producers more than consumers. It also means that the producers can enlarge their output without an increase in cost or a time delay. And because they are in control of the market, the demand is high, then a small increase in price means small thing since it cannot affect the consumers interest. Therefore, their sales will go up.
User Labe
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