If a Subsidy Is Granted to Perfectly Competitive Firms That

question 239

Multiple Choice

If a subsidy is granted to perfectly competitive firms that provide external benefits to society, the firm's marginal cost curve will shift ________ and the industry supply curve will shift to the ________.

• A) down; left
• B) down; right
• C) up; right
• D) up; left

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Definitions:

Inelastic Demand

A market situation where the quantity demanded of a good or service changes very little with a change in its price.

Agricultural Products

Physical goods produced through farming or the broader agricultural sector, including both food items and raw materials.

Sugar Price Support

Government intervention to stabilize or increase the market price of sugar through mechanisms such as tariffs, quotas, or direct subsidies to farmers.

U.S. Labor Force

Comprises all the people actively seeking employment and those currently employed within the United States, whether in full-time or part-time positions.