The Welfare Effect of an Excise Subsidy Indicates That

question 3

Multiple Choice

The welfare effect of an excise subsidy indicates that:

• A)the consumer is better off than without the subsidy.
• B)the consumer is indifferent between an excise subsidy and a cash grant.
• C)excise subsidies should not be used by the government.
• D)government officials know what is better for low-income families than the families themselves.

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Definitions:

Nonrival

A property of a good or service where its consumption by one individual does not reduce availability for others, often found in public goods.

Private Good

A good that is both excludable and rivalrous, meaning it can only be used by one person at a time, and access to it can be restricted.

Excludable

A characteristic of a good or service that allows owners or producers to prevent others from using it without permission or payment.

Rival

An entity competing against another in the same market, striving for a greater share of assets, customers, or recognition.