Subsidies increase supply and lower prices

Steps:

• Subsidies reduce producers' costs, shifting the supply curve rightward.
• This increases quantity supplied at each price level.
• Equilibrium shifts: quantity rises, price falls.
• Result: market price decreases due to greater supply.

Why C is correct:

• Subsidies lower marginal cost of production, increasing supply and decreasing equilibrium price per basic supply-demand model.

Why the others are wrong:

• A: Subsidies require government expenditure, increasing spending.
• B: Greater supply boosts output/quantity produced.
• D: Subsidies do not alter tax rates; they are separate fiscal tools.

Final answer: C