Question

How do taxes and subsidies affect the market price of a commodity?

Answer 1

Answer:

Government subsidies and taxes affect the market price of a commodity in the following ways;

Explanation:

• When there is a government subsidy, the price the government offers is ussually lower, thereby the market price of that commodity shall drop.
• When the government cuts taxes on a commodity, the price of that particular product shall rise.
• when the government raises taxes, then the price of the commodity shall rise