The Graph Shown Portrays a Subsidy to Buyers

question 87

Multiple Choice

The graph shown portrays a subsidy to buyers.The amount of money spent on this subsidy by the government is:

• A) $3,600.
• B) $2,400.
• C) $6,000.
• D) $800.

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Definitions:

Prospect Theory

A behavioral economic theory that describes how people choose between probabilistic alternatives that involve risk, where the probability of outcomes is known.

Marginal Disutility

The added dissatisfaction or inconvenience experienced by consuming one more unit of a good or service.

Marginal Utility

The extra utility a consumer obtains from the consumption of 1 additional unit of a good or service; equal to the change in total utility divided by the change in the quantity consumed.

Absolute Terms

A method of expression or measurement that is independent of other variables or comparisons, focusing on intrinsic values.