explain how a subsidy is a tax in reverse.
A subsidy is a reverse tax where the government gives money to consumers (or producers)
Subsidy = Price Received by Sellers – Price Paid by Buyers
Some facts about subsidies:
1.Who gets the subsidy does notdepend on who receives the check from the government;
2.Who benefits from the subsidy doesdepend on the relative elasticities of demand and supply;
3.Subsidies must be paid for by taxpayers and they create inefficient increases in trade(deadweight loss)
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