A SUBSIDY GIVEN TO THE PRODUCERS PROVIDES A FINANCIAL INCENTIVE FOR THEM TO SUPPLY MORE. BESIDES BEING PAID BY THE CONSUMER , THEY ARE NOW
BEING PAID BY GOVERNMENT ALSO. AS A RESULT, THE GRANTING OF SUBSIDY WILL CAUSE AN INCREASE IN SUPPLY WHILST THE REMOVAL OF SUBSIDY WILL CAUSE A DECREASE IN SUPPLY. MOST COUNTRIES THROUGH OUT THE WORLD SUBSIDISE SOME AGRICULTURAL PRODUCTS. A NUMBER OF THEM ALSO GIVE SUBSIDIES TO NEW AND IMPORTANT INDUSTRIES.
LESS FREQUENTLY, A GOVERNMENT MAY ALSO GIVE A SUBSIDY TO CONSUMERS,
TO ENCOURAGE THEM TO BUY A PARTICULAR PRODUCT .FOR EXAMPLE GRANTS MAY BE GIVEN TO HOUSEHOLDS TO ENABLE THEM TO BUY HOUSES. IN THIS CASE, OF COURSE IT IS DEMAND AND NOT SUPPLY CONDITIONS WHICH CHANGE.
See this video for more explanation.
BEING PAID BY GOVERNMENT ALSO. AS A RESULT, THE GRANTING OF SUBSIDY WILL CAUSE AN INCREASE IN SUPPLY WHILST THE REMOVAL OF SUBSIDY WILL CAUSE A DECREASE IN SUPPLY. MOST COUNTRIES THROUGH OUT THE WORLD SUBSIDISE SOME AGRICULTURAL PRODUCTS. A NUMBER OF THEM ALSO GIVE SUBSIDIES TO NEW AND IMPORTANT INDUSTRIES.
LESS FREQUENTLY, A GOVERNMENT MAY ALSO GIVE A SUBSIDY TO CONSUMERS,
TO ENCOURAGE THEM TO BUY A PARTICULAR PRODUCT .FOR EXAMPLE GRANTS MAY BE GIVEN TO HOUSEHOLDS TO ENABLE THEM TO BUY HOUSES. IN THIS CASE, OF COURSE IT IS DEMAND AND NOT SUPPLY CONDITIONS WHICH CHANGE.
See this video for more explanation.
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