The market for good Z is in equilibrium, with 1000 units being sold at a price of $10. The government provides a subsidy of $2 per unit to producers of good Z. In which circumstances will the government’s total subsidy expenditure be the smallest?
- Aprice elasticity of demand for good Z < 1 and price elasticity of supply for good Z < 1
- Bprice elasticity of demand for good Z < 1 and price elasticity of supply for good Z > 1
- Cprice elasticity of demand for good Z > 1 and price elasticity of supply for good Z < 1
- Dprice elasticity of demand for good Z > 1 and price elasticity of supply for good Z > 1