Increase in production subsidies will shift?

A. the demand curve to the left
B. the supply curve to the right
C. both the supply-demand curves to the left
D. supply curve to the left and demand curve to the right

Correct Answer: Option B

B. the supply curve to the right

Explanation

Subsidy impact: Marginal subsidies on production will shift the supply curve to the right until the vertical distance between the two supply curves is equal to the per-unit subsidy; when other things remain equal, this will decrease price paid by the consumers (which is equal to the new market price) and increase the price received by the producers.