The Difference Between a Tax and a Subsidy Is That

Multiple Choice

The difference between a tax and a subsidy is that when the government places a tax on a good,it ________ the equilibrium price and ________ the equilibrium quantity,whereas when the government places a subsidy on a good,it ________ the equilibrium price and ________ the equilibrium quantity.

A) increases; decreases; decreases; increases
B) increases; decreases; decreases; decreases
C) decreases; decreases; increases; increases
D) decreases; increases; increases; decreases
E) increases; does not change; does not change; increases