Now suppose government reduces the rate of excise duty and raise
subsides. What is the likely to be impact of those on the market of a
product. Explain with diagram

The reduction of excise duties and raised subsidies amount together have positive and favourable impacts on the production of the concerned good. With these conditions, the production will be cheaper and will be more beneficial for a producer to produce even higher units of the good. Consequently, the supply curve will shift parallely rightwards. The rise in supply will push down the price for the good, since there will be now more units of good in the market.

  • -2
What are you looking for?