Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To increase production costs
B
To lower the price of goods and services
C
To eliminate competition
D
To reduce consumer choice
Understanding the Answer
Let's break down why this is correct
Answer
The primary purpose of government subsidies in a market economy is to support certain industries or activities that are important for the public good. Subsidies can help lower the costs of goods or services, making them more affordable for consumers. For example, if the government provides financial support to farmers, they can produce food at lower prices, which helps ensure that everyone has access to fresh produce. This can also encourage more production in areas like renewable energy, where the government wants to promote cleaner options. Overall, subsidies aim to correct market failures and promote economic growth in areas that benefit society.
Detailed Explanation
Subsidies help lower the price of goods and services. Other options are incorrect because Some might think subsidies raise production costs; It's a common belief that subsidies eliminate competition.
Key Concepts
government subsidies
Topic
Government Subsidies and Market Effects
Difficulty
easy level question
Cognitive Level
understand
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