Use the Figure Below to Answer the Following Questions

question 94

Multiple Choice

Use the figure below to answer the following questions. Figure 15.3.1
-Refer to Figure 15.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If a subsidy is granted that generates an efficient quantity,then the quantity produced is

• A)zero.
• B)Q₁.
• C)Q₂.
• D)Q₃.
• E)greater than Q₃.

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Definitions:

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume.

Avoidable Expenses

Costs that can be eliminated if a certain decision is made, such as discontinuing a product line.

Financial Advantage

A benefit enjoyed by an entity that puts it in a stronger financial position, such as lower costs, greater revenues, or superior investment returns.

Avoidable Expenses

Costs that can be eliminated if a particular decision is made, such as discontinuing a product or service.