If the Government's Provision of a Subsidy Is Too Small

question 76

Multiple Choice

If the government's provision of a subsidy is too small to counteract the entire effect of a positive externality, what result can we expect?

• A)The quantity consumed will still be too low.
• B)The quantity consumed will still be too high.
• C)Total surplus will be maximized, but the outcome will be inefficient.
• D)Total surplus will not be maximized, but the outcome will be efficient.

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Definitions:

Forty Years

A time period of forty calendar years, which can signify significant duration in contexts such as careers, history, or measurements of time.

Fair Labor Standards Act of 1938

A U.S. law that established minimum wage, overtime pay eligibility, recordkeeping, and child labor standards.

Overtime Pay

Additional compensation required by law to be paid to eligible employees working beyond the standard work hours.

Minimum Hourly Wages

The lowest hourly payment that employers can legally pay their workers, as established by law or regulation.