A private subsidy has what effect on the amount of a good or service produced? Is a subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?

What will be an ideal response?


A private subsidy increases the production of the good or service that is subsidized. Because it increases the production, a private subsidy is the appropriate policy to overcome the inefficiency that is the result of an external benefit. (A good or service with an external benefit is underproduced by a competitive, unregulated market.)

Economics

You might also like to view...

Of all of the people who became permanent legal residents of the U.S. in 2011, about how many were sponsored by employers?

A. 5% B. 13% C. 25% D. 33%

Economics

Refer to Scenario 14.1. Lisette's dominant strategy will give her a net benefit of

A) $45. B) $75. C) $120. D) $150.

Economics

Raising taxes:

A. always raises tax revenues. B. always decreases tax revenues. C. can sometimes decrease tax revenues. D. None of these statements is true.

Economics

In situations where businesses discriminate in response to the preferences of consumers, discrimination:

A. is consistent with efficient markets. B. will be eliminated by the market. C. will not persist even though it's what the customers want. D. is not consistent with efficient markets.

Economics