Subsidies Quiz

Ten Subsidies questions cover incidence, incentives, and public cost, with equilibrium and benefit-split calculations. Every answer is explained.

Free, with no sign-up.

For High school students and adults reviewing the topic.

About 14 minutes. 10 questions.

How does it work?

Choose one answer or enter a number in the stated unit, then check it.
Round only the final answer in a calculation.

What will you get?

Review a score and an explanation for every answer.

Question 1Illustrative demand is Qd = 180 − 2Pb and supply is Qs = Ps − 30. Sellers receive Ps = Pb + 12 under a per-unit subsidy. Find equilibrium quantity in units, rounded to two decimals.

Enter a number in units.

Answers within 0.005 units of the expected value are accepted.

Question 2Illustrative demand is Qd = 140 − Pb and supply is Qs = Ps − 20. A subsidy of $16 per unit gives Ps = Pb + 16. Find the government’s total payment in dollars, rounded to two decimals.

Enter a number in dollars.

Answers within 0.005 dollars of the expected value are accepted.

Question 3Before support, an illustrative price is $50. After a $10 per-unit subsidy, buyers pay $44 and sellers receive $54. Find the buyer’s share of the subsidy as a percentage, rounded to one decimal place.

Enter a number in %.

Answers within 0.05 % of the expected value are accepted.

Question 4A public authority absorbs part of the risk of selected private loans instead of making a cash payment. How should this advantage be classified?

A compulsory tax increase on each supported borrowerA direct price ceiling on the goods the borrower sellsAn absence of support because no check is handed overA subsidy delivered through a contingent liability

Question 5Demand responds little to price while supply adjusts readily. Which side tends to gain more from a small per-unit subsidy?

The payment administrator, through ownership of the goodsBuyers, through a larger improvement in their effective priceThe legal recipient, independently of market responsivenessSellers, because the most responsive side captures the larger share

Question 6A seller receives public money on each eligible sale. How does this differ from a binding price ceiling?

It finances a transaction rather than merely restricting the charged priceIt forbids sales above a stated legal maximumIt makes public expenditure unnecessary when transactions increaseIt removes the seller’s return from the market adjustment

Question 7Many recipients would have made the same purchase without assistance. What matters for evaluating effectiveness?

The total supported purchases identified as new actions caused by the policyThe number of applications replacing evidence about behaviorThe additional actions compared with a credible no-policy outcomeThe announcement’s stated objective guaranteeing the result

Question 8A temporary payment ends after firms have invested in extra capacity. What shapes the adjustment?

The notice, contracts, and alternative uses of existing capacityThe earlier investment removing the need to change outputThe former payment continuing automatically through market pricesThe expiry date cancelling the physical capital already installed

Question 9Support reduces the measured price of one item for a time. What follows for economy-wide inflation?

The entire price index falls by the same percentage as that itemThe targeted price reduction permanently fixes the general price levelThe effect depends on funding, supply responses, and the item’s weightThe funding source has no bearing on wider demand

Question 10A policy evaluator counts the recipient’s payment as newly created wealth. What should replace that calculation?

The budget receipt used to measure the value of new machineryThe real benefits and resource costs, distinguishing transfersThe policy’s social benefit equal to its advertised cash paymentThe transfer added to both social output and net new resources

Answer every question to see and share your score.

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