Learning Path
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A
B → A → C → D
B
B → C → A → D
C
C → B → A → D
D
A → B → C → D
Understanding the Answer
Let's break down why this is correct
Answer
When the government implements a subsidy, it provides financial support to producers, making it easier for them to produce goods. This extra money encourages producers to increase their supply because they can now receive higher prices for their products. As a result of this increased supply, consumer prices tend to decrease, making goods more affordable for buyers. However, while this may seem beneficial, the market can experience deadweight loss, which means that the overall efficiency of the market is reduced because resources are not being used in the most effective way. For example, if the government subsidizes corn production, farmers may grow more corn than needed, leading to wasted resources and less variety in food choices.
Detailed Explanation
First, the government gives money to help producers. Other options are incorrect because This option suggests that prices drop before producers respond; This option starts with lower prices, which is not correct.
Key Concepts
Government interventions
Market efficiency
Deadweight loss
Topic
Government Policies and Market Efficiency
Difficulty
medium level question
Cognitive Level
understand
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