Given a Choice Between an Equal-Cost Cash Grant and an Excise

question 19

Multiple Choice

Given a choice between an equal-cost cash grant and an excise subsidy,a consumer will:

• A)prefer an excise subsidy.
• B)prefer an excise subsidy if the good is a normal good.
• C)be indifferent between an excise subsidy and a cash grant.
• D)be worse off with an excise subsidy.

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Definitions:

Probability

A quantification of the probability that a specific event will take place, commonly represented as a value ranging from 0 to 1.

Normal Model

A statistical model characterized by the normal (Gaussian) distribution, representing a bell-shaped curve where most observed data falls close to the mean.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values in a dataset deviate from the mean.

Weekly Income

The total amount of money earned or received by an individual or household in the span of one week.