A Subsidy Can Actually Cause the Consumption of Subsidized Goods

question 37

Multiple Choice

A subsidy can actually cause the consumption of subsidized goods to fall if:

• A)the consumer has concave indifference curves.
• B)the government prohibits resale of the good.
• C)the price of other goods also falls.
• D)the subsidized quantity of the good is fixed.

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Definitions:

Maximax Criterion

A decision rule used under uncertainty, selecting the option with the maximum possible return, focusing on the most optimistic outcome.

Row Maximums

The highest values within each row of a matrix or table, typically used in data analysis and optimization problems.

Equally Likely Criterion

A decision-making principle where all outcomes are considered to have the same probability of occurring.

Perfect Information

Perfect information refers to a theoretical scenario where all participants in a market have complete and instantaneous knowledge of all market conditions and variables, leading to an optimal decision-making environment.