What is a subsidy and can you provide an example?

Answer 1

A subsidy is a payment (usually by government) to the producer of a good or service in order to lower the cost of the good or service to consumers.

Examples abound: public education, public transport, certain individuals who buy their health insurance on exchanges.

Ask yourself if the consumer is paying the full cost of the good or subsidy. If the answer is no, then ask who is making up the difference?