The Graph Shown Portrays a Subsidy to Buyers

question 112

Multiple Choice

The graph shown portrays a subsidy to buyers. The deadweight loss arising from the subsidy is:

• A) $400.
• B) $3,600.
• C) $750.
• D) $800.

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Definitions:

Purchasing

The process of obtaining goods or services, usually for business purposes.

Cost Drivers

Factors that cause a change in the cost of an activity, impacting the economic amount associated with production or delivery of a service.

Variable Costs

Costs that vary in direct proportion to changes in production or sales volumes, such as raw materials and direct labor.

Fixed Costs

Costs that do not change with the level of output or production, such as rent, salaries, and insurance.