A subsidy to buyers has been placed in the market in the graph shown. Why might the government enact such a policy?
A. As a way to encourage consumers to substitute away from the good
B. As a way to discourage the production of the good
C. As a way to encourage the consumption of the good
D. As a way to discourage the consumption of the good
Answer: C
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Refer to Figure 3-5. At a price of $20
A) there would be a surplus of 8 units. B) there would be a shortage of 4 units. C) there would be a surplus of 0 units. D) there would be a shortage of 8 units.
When Fed policy is being used to offset an inflationary gap, which of the following variables increases as a result? a. Aggregate demand. b. Investment
c. Net Exports. d. Interest rates.
The short-run aggregate supply curve is most likely to shift down (to the right) when actual output is:
A. not equal to potential output, regardless of whether it is above or below. B. less than potential output. C. equal to potential output. D. greater than potential output.
Unlimited liability exists when
A) the profits of the firm are taxed once. B) a firm dissolves when the owner dies. C) a corporation exists. D) the personal assets of the owner of a firm can be seized to pay off the firm's debts.