Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

3. The Market Forces of Supply and Demand

Market Equilibrium

Microeconomics

3. The Market Forces of Supply and Demand

Market Equilibrium

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Multiple Choice

What happens in the market for corn if the government decides to subsidize farmers?

Demand shifts to the left

Demand shifts to the right

Supply shifts to the left

Supply shifts to the right

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Verified step by step guidance

Understand the concept of a subsidy: A subsidy is a financial assistance provided by the government to producers, which lowers their production costs and encourages them to produce more.

Identify the effect of a subsidy on supply: When the government provides a subsidy to farmers, it effectively reduces their cost of production, making it cheaper to produce each unit of corn.

Analyze the supply curve: A reduction in production costs due to a subsidy will cause the supply curve to shift to the right, indicating an increase in supply at every price level.

Consider the demand curve: A subsidy directly affects the supply side of the market, not the demand side. Therefore, the demand curve remains unchanged.

Conclude the market effect: With the supply curve shifting to the right, there will be an increase in the quantity of corn supplied in the market, potentially leading to a lower equilibrium price if demand remains constant.