Subsidies are important because they can change how people buy things and how markets work. Here’s how they do this:
Lower Prices: Subsidies help lower the price of products. This makes them more affordable for everyone. For example, if the government gives money to help reduce public transport costs, more people might choose to ride the bus or train instead of using their cars.
Increased Demand: When prices drop, more people want to buy those goods. If farmers get help (a subsidy) for growing wheat, the price of bread will go down. This means more people will buy bread products.
Market Entry: Subsidies can help new businesses start up. For example, when the government offers incentives (subsidies) for renewable energy, more companies are willing to invest in solar power.
In simple terms, subsidies change how people spend money and how both buyers and sellers behave in the market.
Subsidies are important because they can change how people buy things and how markets work. Here’s how they do this:
Lower Prices: Subsidies help lower the price of products. This makes them more affordable for everyone. For example, if the government gives money to help reduce public transport costs, more people might choose to ride the bus or train instead of using their cars.
Increased Demand: When prices drop, more people want to buy those goods. If farmers get help (a subsidy) for growing wheat, the price of bread will go down. This means more people will buy bread products.
Market Entry: Subsidies can help new businesses start up. For example, when the government offers incentives (subsidies) for renewable energy, more companies are willing to invest in solar power.
In simple terms, subsidies change how people spend money and how both buyers and sellers behave in the market.