Per-Unit Subsidy

Definition

A Per-Unit Subsidy is a payment made by the government to producers for each unit of a good or service they produce. It aims to lower production costs and increase supply, ultimately benefiting consumers.

Related terms

Price Floor: A government-imposed minimum price set above the equilibrium price in order to support producers.

Producer Surplus: The difference between what producers are willing to sell a product for and what they actually receive.

Elasticity of Supply: A measure of how responsive the quantity supplied is to changes in price.