QUESTION 9

1. 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; increases; decreases; decreases

c. decreases; decreases; increases; increases

d. decreases; increases; increases; decreases

e. increases; does not change; does not change; increases