-The Government Might Provide a Subsidy When

question 213

Multiple Choice

-The government might provide a subsidy when

• A) a negative externality exists.
• B) an effluent fee has been unsuccessful.
• C) it wants to increase the amount of a good consumed.
• D) it wants to transform a negative externality into a positive externality.

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Definitions:

Less Elastic

Describes a situation where the demand or supply for a product or service is relatively unresponsive to changes in price.

Perfectly Inelastic

A situation where the demand or supply for a good does not change in response to changes in price.

Demand Curve

A graph that shows the relationship between the quantity of a good demanded and its price.

Completely Vertical

In economics, this can refer to a supply curve that is perfectly vertical, indicating that the quantity supplied is completely unresponsive to changes in price.