21/10/15
Lesson 2: Subsidy
Learning Objective: I can explain how the granting of a subsidy may affect consumers, producers, and the government.
DA: List the key factor which determines the amount of tax burden for the producer and consumer.
Subsidy: An amount of money paid by the government to a firm, per unit of output.
In many ways you can look at subsidies as being a reverse tax:
DA: List the key factor which determines the amount of tax burden for the producer and consumer.
Subsidy: An amount of money paid by the government to a firm, per unit of output.
- Lower the price of essential goods, such as gasoline, to consumers. Government hopes consumption of the product will be increased, encouraged by the lower price.
- To guarantee the supply of products that the government thinks are necessary for the economy.
- Enable producer to compete with overseas trade, thus protecting home industry.
In many ways you can look at subsidies as being a reverse tax:
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Activity/HW:
SL-SWP 5.4, pg.76
HL-Advanced Assessment, pg. 73