Which One of the Following Statements About Subsidies Is NOT

question 81

Multiple Choice

Which one of the following statements about subsidies is NOT correct?

• A) Subsidies cause deadweight losses.
• B) Who actually receives the subsidy does not depend on who gets the check from the government.
• C) Subsidies always increase the gains from trade for producers.
• D) Who benefits from the subsidy depends on the relative elasticities of demand and supply.

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Definitions:

Nonrival

A characteristic of a good or service where its use by one person does not reduce its availability to others.

Consumption

The use of goods and services by households or individuals, constituting one of the primary components of economic activity.

Demand-side Market Failure

A situation where the quantity of a product demanded by consumers does not equate to the quantity supplied by producers due to externalities or imperfect information, leading to an inefficient allocation of resources.

Efficient Amount

The quantity of a good or service that maximizes social welfare, taking into account all costs and benefits.