Which of the following statements is NOT true regarding subsidies?
When a subsidy is present, the price received by sellers exceeds the price paid by buyers.
Similar to a tax, a subsidy also creates a deadweight loss.
The main beneficiary of a subsidy is the party that directly receives the check from the government.
Subsidies create inefficient increases in trade.
The statement that is NOT true regarding subsidies is:
When a subsidy is present, the price received by sellers exceeds the price paid by buyers.
This statement is misleading because, in the case of a subsidy, the price paid by buyers is typically lower than the price received by sellers. The subsidy effectively lowers the cost for buyers while increasing the revenue for sellers, but it does not imply that the price received by sellers exceeds the price paid by buyers in a straightforward manner. Instead, the subsidy creates a gap where the seller receives a higher effective price due to the subsidy, while buyers pay a lower price.
The other statements regarding subsidies are generally true: