Subsidies are most likely to:
A. leave total economic surplus unchanged, but transfer surplus from producers to consumers.
B. reduce total economic surplus.
C. increase total economic surplus.
D. reduce consumer surplus.
Answer: B
You might also like to view...
There's not a single golf course in downtown Chicago because
A) it would be physically impossible to produce. B) it would ruin the hustle and bustle of the city. C) the opportunity cost of creating such a course is too low. D) the demand for land for non-golf uses is high enough to discourage such an investment. E) all of the above are true.
Which of the following could explain why the terms of trade of developing countries might deteriorate over time?
A) Developing country exports consist mainly of manufactured goods. B) Developing country exports consist mainly of primary products. C) Commodity export prices are determined in highly competitive markets. D) Commodity export prices are solely determined by developing countries. E) Developing country exports are too diverse.