***Instructions: Answer the following questions with a minimum of 100 word-count per question. Separate the questions into different paragraphs, total of at least 3 paragraphs. Scholarly sources are required, at least 1, and the source I provided for you is a must use source. Here is the reference: Sexton, R. L. (2013). Exploring Economics (6th ed.). Mason, OH: South-Western, Cengage Learning. Use APA Format to include in-text citation and a reference page. You do not need a cover/title page. ABSOLUTELY NO PLAGIARISM!!! Please read the material attached prior to answering the questions. Let me know if you have any questions or concerns.
The purpose of government subsidies is to encourage activities that are deemed to have positive spillovers. A professional sports team, for example, is thought to increase tax revenues and increased demand for local businesses.
Choose to discuss another good or service for which government provides a subsidy. Include each of the following in your initial post. *Use US goods and services, NOT international goods and services!*
1. Describe the subsidy program and explain what spillovers are generated from the subsidy.
2. Explain how both consumer and producer surplus will be affected by the subsidy. Will they increase or decrease?
3. Who are the winners (i.e. increased surplus) and losers (loss of surplus) that result from the subsidy? Remember that there are always trade-offs, and therefore, someone must be the loser.