Comparing the Original Budget Line with the Budget Line for an Excise

question 59

Multiple Choice

Comparing the original budget line with the budget line for an excise subsidy and a cash grant:

• A)the budget line for a cash grant shifts such that it is tangent to the same indifference curve so that the well-being of the consumer is the same.
• B)the slope of the budget line for a cash grant is positive.
• C)the budget line for a cash grant is parallel to the original budget line.
• D)the budget line for an excise subsidy shifts such that it is tangent to the same indifference curve so that the well-being of the consumer is the same.

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Definitions:

Vertically Integrated

A company's consolidation of all or part of the production process and supply chain within itself, controlling different stages of production usually to increase the company's power in the marketplace.

Competitive Market

A market structure where numerous producers compete to sell their goods or services to many buyers, leading to efficient pricing and innovation.

Market Price

The present cost at which a product or service is available for purchase or sale in the marketplace.

Net Marginal Revenue

The difference between the marginal revenue earned from selling an additional unit of a product or service and the marginal cost of producing that unit.