Economics (AS & A Level) · Oct / Nov 2022 · Paper 13 · Question 16
9708Price elasticity, income elasticity and cross elasticity of demand
The market for good Z is in equilibrium with 1000 units sold at a price of $10. The government pays a subsidy of $2 per unit to producers of good Z. Under which conditions will the total spending by the government on the subsidy be smallest?
- A< 1 ; < 1
- B< 1 ; > 1
- C> 1 ; < 1
- D> 1 ; > 1
As printed in the paper
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Correct answer: A. < 1 ; < 1
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