19 download_doc-3.php

19 download_doc-3.php - G202 The Effects of Subsidies...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
G202 (1/26/09) The Effects of Subsidies Subsidies given to sellers: cause an outward shift of the supply curve (increase supply). Subsidies given to sellers effectively lower the costs of production. General Results of a subsidy: Decreased prices to buyers. Consumer surplus increases Increased prices to sellers. Producer surplus increases Increased quantity bought and sold. Inefficiency can be reduced or increased depending on the state of the market before the subsidy. The Effects of Regulation Regulation imposed on sellers: cause an inward shift of the supply curve (decreased supply). Regulation causes sellers to incur higher operating costs (compliance costs). General Results of a regulation: Increased prices to buyers. Consumer surplus decreases Decreased prices to sellers. Producer surplus decreases Reduced quantity bought and sold. Inefficiency can be reduced or increased depending on the
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 2

19 download_doc-3.php - G202 The Effects of Subsidies...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online