Government Subsidies for Goods That Generate External Benefits May Increase

question 245

True/False

Government subsidies for goods that generate external benefits may increase economic efficiency.

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Definitions:

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold, including lease payments, wages, and insurance fees.

Gross Profit

The difference between a company's sales revenue and its cost of goods sold, representing the profit made before accounting for operating expenses.

Special Order

A one-time customer order often involving unique specifications, which might not fit into the company's standard offerings.

Variable Cost

Costs that vary directly with the level of production or volume of output, such as raw materials and direct labor.