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

question 48

Multiple Choice

If the government's provision of a subsidy is too small to counteract the entire effect of a positive externality,the:

• A) quantity consumed will still be too low.
• B) 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:

Null Hypothesis

A statement or assumption that there is no effect or no difference, and it serves as the starting point for statistical testing.

Sample Proportion

The fraction or percentage of observations in a sample that belong to a particular category, used to estimate the proportion in the entire population.

Two-Tailed Hypothesis

A statistical test hypothesis that considers both directions of deviation from the null hypothesis, thus testing for the possibility of both positive and negative effects.

Population Proportion

The ratio of a specific subgroup within a population to the entire population, typically expressed as a percentage.