Consider a Market in Which There Is an External Benefit

question 116

Multiple Choice

Consider a market in which there is an external benefit. A private subsidy paid to producers can be used to arrive at the efficient market equilibrium because the subsidy will

• A) decrease demand.
• B) decrease the supply of the good.
• C) increase the price demanders pay.
• D) increase the quantity produced.

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Definitions:

Identical Firms

Companies that offer the same products or services and operate in the same market with similar strategies and resources.

Cost Data

Information regarding the expenses incurred in the production, operation, or acquisition of goods and services.

MC Curve

Represents the marginal cost curve, which shows the cost of producing an additional unit of a good or service.

Technological Advance

The development of new technologies and improvement of existing technologies to increase productivity or address new challenges.