A Government Subsidy

question 269

Multiple Choice

A government subsidy

• A) is a policy that can be used to help eliminate the deadweight loss from an external cost.
• B) can help achieve an efficient amount of output when the good has an external benefit.
• C) increases consumers' marginal benefit from the good.
• D) Both answers A and C are correct.
• E) Both answers B and C are correct.

---

Definitions:

Peak Seasonal

Periods during which demand for certain goods or services increases significantly, often related to the time of year.

Cash Discount

A cash discount is a reduction in the invoice price offered by a seller to the buyer in return for early payment of their bill, as a way to encourage quicker payment.

Net 30

A payment term indicating that full payment is due within 30 days of the invoice date.

Trade Discount

A reduction in the listed price of goods or services offered by a seller to buyers in the same trade.