Unit 2.7 · Role of Government in Microeconomics
Subsidies
AO2AO4Diagram required
Syllabus Requirement
Payments from the government to producers to encourage production and lower prices.
Assessment Objectives
AO2Application and Analysis
AO4Use of Appropriate Skills
Summary
Subsidies are financial aids provided by the government to domestic producers to reduce their production costs. This intervention aims to support low-income households, promote equity, and influence production levels in the economy by encouraging the provision of socially beneficial goods and services.