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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A monetary offset occurs when:
A. the central bank responds to expansionary fiscal policy with contractionary monetary policy. B. the central bank responds to expansionary fiscal policy with expansionary monetary policy. C. the central bank responds to contractionary monetary policy with contractionary fiscal policy. D. the central bank responds to expansionary monetary policy with contractionary fiscal policy.
Refer to Figure 5-6. What does D1 represent?
A) the demand curve reflecting private benefits B) the demand curve reflecting social benefits C) the social welfare curve D) the positive externalities curve