Which of the Following Is a Necessary Condition for Government

question 83

Multiple Choice

Which of the following is a necessary condition for government subsidies to influence a firm to choose an output level as if it were a Stackelberg leader?

• A) The subsidy must be announced before the firms choose output levels.
• B) The subsidy must be equal to the firm's marginal cost.
• C) The subsidy must be equal to the firm's rival's marginal cost.
• D) The firm does not have any fixed costs.

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Definitions:

Specialization

Division of productive activities so that no one is self-sufficient.

Self-Sufficient

The ability of an individual, household, or nation to meet all their needs without external assistance or trade.

Standard of Living

A measure of the wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.

Importing

The process of importing products or services from other countries for the purpose of selling them domestically.