When Positive Externalities Exist in a Market, If a Subsidy

question 87

Multiple Choice

When positive externalities exist in a market, if a subsidy is imposed:

• A)those who interact in the market will lose surplus.
• B)those who interact in the market will gain surplus.
• C)those who do not interact in the market, but are affected by the externality, will gain surplus.
• D)None of these are necessarily true.

---

Definitions:

Department Of Homeland Security

A department of the U.S. federal government created in response to the September 11 attacks, tasked with protecting the territory of the U.S. from terrorist attacks and responding to natural disasters.

Patriot Act

Legislation passed in the United States following the September 11 attacks, aimed at strengthening national security by expanding the powers of law enforcement agencies to surveil and detain suspected terrorists.

Dual Federalism

A political arrangement in which state and federal governments are seen as co-equal sovereigns with separate and distinct areas of jurisdiction, often referred to as "layer-cake" federalism.