Subsidies as non-repayable financial support to producers

Steps:

• Recall that subsidies are government payments to firms to encourage production or lower costs.
• Evaluate option A: Subsidies typically go directly to firms to support operations.
• Evaluate option B: Check if subsidies require repayment, unlike loans.
• Evaluate options C and D: Confirm their effects on costs and supply curve.

Why B is correct:

• Subsidies are defined as grants or direct payments, not loans, so they do not need to be repaid.

Why the others are wrong:

• A is true: Subsidies are payments made to firms to aid production.
• C is true: By covering part of costs, subsidies lower effective production expenses.
• D is true: Reduced costs increase supply, shifting the supply curve rightward.

Final answer: B