Subsidy Effects on Spending

Steps:

• Identify subsidy amount and market context (missing here, assume standard model with given totals).
• Calculate government spending: subsidy per unit times total units subsidized.
• Calculate consumer spending change: price reduction times quantity change due to subsidy.
• Compare to baselines for net increases/decreases.

Why C is correct:

• Matches formula where government outlay = subsidy rate × equilibrium quantity ($480M), and consumer savings = subsidy × quantity ($200M decrease in spending).

Why the others are wrong:

• A: Underestimates government cost and consumer savings based on partial quantity.
• B: Overstates government spending while understating consumer decrease.
• D: Identical to C, likely a duplicate option.

Not enough information to verify without full market data.

Final answer: C