Econ mc ~easy~

First, the government gives out subsidies to good x, so the supply of good x will increase as the cost of production will fall. thus, C and D must not be the correcr answer.

The answer should be B. If the demand is PERFECTLY INELASTIC, the consumers will enjoy the whole susidy benefit. And the price of good x will fall.

Answer A is wrong, if the demand is perfectly elastic, the producers will enjoy the whole subsidy benefit. The price will remain unchanged.