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Answer :
Final answer:
In a case where demand for solar panels is less elastic than the supply, a government subsidy primarily benefits producers, although consumers also gain some benefit.
Explanation:
When demand is less elastic than supply, a government subsidy on the purchase of solar panels would ultimately benefit producers more than consumers. That's because less elastic demand means that consumers are not highly responsive to the price changes. In this case, producers can pass a good part of the subsidy on to consumers in the form of higher prices, and thus capture most of the benefits. However, consumers will also gain some benefit from the lowered net price of solar panels due to the subsidy.
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