1. Consider the following statements:

1) A subsidy paid to demanders will tend to increase consumer surplus by more than the same subsidy paid to suppliers.

2) The more elastic the supply, the more suppliers will capture the value of a subsidy.

Select one:

a. Both statements are true.

b. Both statements are false.

c. Statement 1is true, but statement 2 is false.

d. Statement 2 is true, but statement 1 is false.

8. Consider the following statements:

1) Subsidizing a good with a negative externality can increase gains from trade in that market.

2) Subsidizing a good requires taxes in other markets that can cause deadweight loss. Which of the following is correct?

Select one:

a. Statement 1 is true. Statement 2 is false.

b. Both statements are false.

c. Both statements are true.

d. Statement 2 is true. Statement 1 is false.