# Elasticity and share of subsidies

If buyer, demand of elasticity has higher elasticity compare with that of seller, why the buyer has lower share of subsidies? (enjoy lower benefit of subsidies)

I want the answer can be explained in common sense but not in curve approach. PLZ!!

Rating

Firstly, elasticity of demand = %△Qd / %△P

and elasticity of supply = %△Qs / %△P

After the subsidies levied,

the production cost and the price immediately fall.

The quantity supplied stay at the initial level,

and the quantity demanded increased.

The excess demand induces competition.

Then the price will be bidden up.

When the price starts to be bidden up,

the Qd starts to decrease(MUV increases)

and Qs starts to increase(MC increases)

As the Ed of Demand is higher than the Ed of Supply

When Qd decreases and Qs increases,

MUV increases slighter than MC.

The rapid increase in MC bid up the price rapidly in the competition also

Therefore, the larger share of subsidies will be captured by the supplier.

Source(s): I am a F.7 student and just try to answer it like doing exam, I am not sure... =.=