When Does a Subsidy That Benefits Consumers Result in a More

question 294

Multiple Choice

When does a subsidy that benefits consumers result in a more efficient allocation of a resource?

• A) when the good being produced or consumed is not scarce
• B) when the good being produced or consumed generates a negative externality
• C) when the good being produced or consumed generates a positive externality
• D) when the equilibrium price of the good is one that consumers don't like

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