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How does it shift the supply curve? The food is getting bought from farmers anyways, for cash, they don't give a damn about if it is going to be sold to people
by anovikov 14y ago
How does it shift the supply curve? The food is getting bought from farmers anyways, for cash, they don't give a damn about if it is going to be sold to people in shops, distributed for free, or stolen.
- intended 14y agoHmm. The subsidy/pds is supposed to shift the price of goods down, so corruption does affect the intended price of goods by making them unavailable at the subsidized rate. That's why I chose the supply curve. Correct me if I got it wrong.
- anovikov 14y agoThere is no relation to the supply curve. Because there is no change in the price at which the product is purchased from producers. Demand shifts of course (the overall price of the product drops because the stuff that wasn't supposed to make it to the market gets there, but free stuff disappears -> structure changes).
- intended 14y agoAh yes, got it, you are correct. Thank you. The supply curve is the amount of goods produced at x price. Since x isn't being changed here for sellers, it doesn't move. The demand curve does move because of the distorting effects of the subsidy/PDS, and then again because of corruption.