ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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generally lower cost, which allows a firm to produce more goods
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generally increase cost, which forces the firm to produce fewer goods
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have little impact
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were outlawed in 1985
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Detailed explanation-1: -1. Production subsidy. This type of subsidy is provided in order to encourage the production of a product. In order for manufacturers to increase their production output, the government compensates for some of its parts in order to lessen their expenses while increasing their output.
Detailed explanation-2: -When government subsidies are implemented to the supplier, an industry is able to allow its producers to produce more goods and services. This increases the overall supply of that good or service, which increases the quantity demanded of that good or service and lowers the overall price of the good or service.
Detailed explanation-3: -The subsidy lowers the cost for the producers to bring the good or service to market. If the right level of subsidization is provided, all other things being equal, then the market failure should be corrected.
Detailed explanation-4: -Answer and Explanation: A government subsidy to the producers of a product increases product supply. This happens because a subsidy helps in the reduction of the cost of production. The reduction in the cost of production makes the production of more outputs possible.