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Government Tools (Subsidies)
Transcript of Government Tools (Subsidies)
(Subsidies) Payments to private businesses by the government. Example:
Since consumers want wheat products such as Flour Or
Cereal The government makes it affordable by granting a subsidy to wheat farmers.
It lowers the cost of production, which motivates farmers to plant more. It promises higher profit for the Farmers also. It makes the supply curve shift to the right. Another example is when the government gives money to computer production companies. So to make the parts of computers cheaper for production, the producers make more.
When there are more products, its cheaper for us, the consumers, to buy. THE END BUT!
subsidies can be either good or bad depending on how you look at them. They are good for consumers because it lowers prices. And they are good for producers because it raises the profit.
They are bad because tax payers have to pay for the funds that the government supplies to the farmers or small businesses.