Final answer:
A subsidy for air conditioners would likely lead to an increase in their supply, which in turn would decrease the price and increase the quantity of air conditioners according to the supply and demand model.
Step-by-step explanation:
In the context of the product market, a subsidy for air conditioners would be considered an increase in supply since the cost of production is reduced for manufacturers, allowing them to produce more air conditioners. In the supply and demand model, an increase in supply creates an effect of shifting the supply curve to the right, leading to two possible outcomes: decrease in price and increase in quantity. So, considering the options given, the most likely effect based on the standard model of supply and demand would be C) Decrease in price, Increase in quantity. A concrete example of this is portrayed in some energy sectors where a government subsidy reduces the effective cost of production leading to a lowered selling price and increased availability of the product to consumers.
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