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Payments to both commercial firms and low-income individuals are examples of direct subsidies. This could include housing allowances, food vouchers for low-income families, or payments to private businesses as ?cash in the bank? payments.

The objective of a subsidy is to encourage and improve economic activity. Through subsidies, the government makes goods and services available to consumers at reduced prices, thereby improving the state of the economy.

A subsidy will shift the supply curve to the right and therefore lower the equilibrium price in a market. The aim of the subsidy is to encourage production of the good and it has the effect of shifting the supply curve to the right (shifting it vertically downwards by the amount of the subsidy).

What is Subsidy. Definition: Subsidy is a transfer of money from the government to an entity. It leads to a fall in the price of the subsidised product. Description: The objective of subsidy is to bolster the welfare of the society. It is a part of non-plan expenditure of the government.

A subsidy is an economic benefit or financial aid given by the government to individuals, institutes or organisations in the form of a cash payment or a tax reduction.

A subsidy is a direct or indirect payment to individuals or firms, usually in the form of a cash payment from the government or a targeted tax cut. In economic theory, subsidies can be used to offset market failures and externalities to achieve greater economic efficiency.

In the most general terms, a subsidy can be. defined as any government assistance that (i) allows consumers to purchase goods. and services at prices lower than those offered by a perfectly competitive private.