In a Perfectly Competitive Market, Which of the Following Will

question 65

Multiple Choice

In a perfectly competitive market, which of the following will not occur as a result of a subsidy?

• A)The market will overproduce relative to the efficient level.
• B)Consumer surplus will be higher than with no subsidy.
• C)Producer surplus will be higher than with no subsidy.
• D)There will be no deadweight loss from the subsidy.

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Definitions:

Control Group

Of an experiment, group of individuals identical to an experimental group except for the independent variable under investigation.

Experimental Group

In an experiment, group of individuals who have a certain characteristic or receive a certain treatment as compared with a control group.

Inductive Reasoning

A method of reasoning in which general principles are inferred from specific observations.

Experimental Group

A group of subjects in an experiment who are exposed to the variable or intervention being tested, to assess its effect.