When Comparing a Cash Subsidy and a Voucher Worth the Same

question 59

Multiple Choice

When comparing a cash subsidy and a voucher worth the same dollar amount, but only good for the purchase of a single good:

• A)a consumer can never be better off with a cash subsidy than with a voucher.
• B)a consumer can never be better off with a voucher than with a cash subsidy.
• C)a cash subsidy will always make the consumer better off than the consumer would be with a voucher.
• D)a voucher will always make the consumer better off than the consumer would be with a cash subsidy.

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Definitions:

Direct Labor

The wages and other costs for labor that are directly involved in the manufacturing of a product or the provision of a service.

Raw Material

The basic material from which a product is made, typically processed and used in the manufacturing process.

Materials Price Variance

The difference between the actual cost of raw materials and the expected (standard) cost, used in budgeting and financial analysis to gauge purchasing efficiency.

Direct Materials

Raw materials that are directly used in the manufacturing of a product and are easily traceable to the final product.