5. A subsidy is the opposite of a tax with a tax of $ 0.50 to the buyers of cups of coffee, the government collects $ 0.50 for each cup of coffee purchased; with a subsidy $ 0.50 to coffee sellers, the government pays sellers $ 0.50 to sellers for every cup of coffee sold. Show the effect of a subsidy of $ 0.50 per cup on the cup offer curve of coffee, the effective price paid by consumers, the price received by the vendors and the amounts of cups sold. (4 points) b. Do consumers benefit or lose by this policy? The producers do they benefit or lose? Does the government benefit or lose? (3 points)
Get Answers For Free
Most questions answered within 1 hours.