In a Perfectly Competitive Market, Which of the Following Will

question 16

Multiple Choice

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

• A)The market will under-produce relative to the efficient level.
• B)Consumer surplus will be higher than with no subsidy.
• C)Producer surplus will be higher with no subsidy.
• D)The subsidy causes a deadweight loss.

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Definitions:

Percentage

A proportion or share in relation to a whole, expressed as a fraction of 100.

Innovation

The process of creating new ideas, products, or methods, including the improvement of existing ones, to meet new requirements or market needs.

Product Innovation

The development of new or significantly improved goods or services to meet consumer needs or open new markets.

Process Innovation

Improvements in the methods or processes of producing goods or providing services to increase efficiency and reduce costs.