Increase in production subsidies will shift
...Increase in production subsidies will shift
The demand curve to the left
The supply curve to the right
Both the supply demand curves to the left
Supply curve to the left and demand curve to the right
Correct answer is B
Subsidy impact. Marginal subsidies on production will shift the supply curve to the right until the vertical distance between the two supply curves is equal to the per unit subsidy; when other things remain equal, this will decrease price paid by the consumers (which is equal to the new market price) and increase the price received by the producers.
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