When Taxes or Subsidies on a Particular Product Are Introduced

question 40

Multiple Choice

When taxes or subsidies on a particular product are introduced into the general equilibrium model we can be sure that

• A)taxes make the taxed product appear too expensive to its producer.
• B)subsidies make the product appear too cheap to its producer.
• C)we get too much of the subsidized product and too little of the taxed product.
• D)a more fair allocation of resources is possible.

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