Practice Questions
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How can per unit subsidies help mitigate negative externalities in a market economy?
Per unit subsidies lower production costs. Other options are incorrect because Some might think subsidies raise prices; This option suggests subsidies...
How do per unit subsidies impact consumer welfare in an economy?
Per unit subsidies lower the price of goods for consumers. Other options are incorrect because Some think subsidies hurt consumers by messing up the m...
How do per unit subsidies affect the efficiency of resource allocation in the presence of externalities?
Per unit subsidies can help increase production. Other options are incorrect because This answer suggests that subsidies fix all problems; This answer...
How do per unit subsidies affect a country's comparative advantage in international trade?
Per unit subsidies help lower production costs for local businesses. Other options are incorrect because Some might think subsidies make production le...
How do per unit subsidies affect the producer surplus in a competitive market when considering the supply and demand framework?
Per unit subsidies lower production costs for producers. Other options are incorrect because This option suggests that subsidies shift the supply curv...
What is a per unit subsidy in economics?
A per unit subsidy is money given for each item made. Other options are incorrect because Some might think a tax is like a subsidy; A price increase m...
What effect do per unit subsidies have on market equilibrium for a product?
Per unit subsidies help producers by giving them extra money for each item they sell. Other options are incorrect because Some might think subsidies r...
What effect do per unit subsidies typically have on the supply curve in a market?
Per unit subsidies help producers by lowering their costs. Other options are incorrect because Some might think subsidies make it harder to produce go...
Arrange the following steps in the correct order of how per unit subsidies influence production and market efficiency: A) Firms receive subsidies for each unit produced, B) Marginal costs for firms decrease, C) Firms increase production levels, D) The market moves towards allocative efficiency.
Firms get money for each unit they make. Other options are incorrect because This option suggests firms increase production before they get subsidies;...
If a government implements per unit subsidies for a specific good, what is the most likely immediate effect on the market for that good?
When the government gives money for each unit sold, producers can make more of the good. Other options are incorrect because Some might think that les...
How do per unit subsidies impact a firm's production decisions and market efficiency?
Subsidies lower the cost of making products. Other options are incorrect because This idea suggests that only consumers gain from subsidies; This opti...
How do per unit subsidies influence a firm's production decisions in a market?
Per unit subsidies lower the cost of making each product. Other options are incorrect because Some might think subsidies always lead to too much produ...
A government decides to implement a per unit subsidy for electric vehicle manufacturers to encourage production. Which of the following outcomes is most likely to occur as a result of this subsidy?
When the government gives money to manufacturers for each electric vehicle made, it lowers their costs. Other options are incorrect because This optio...
A government decides to implement per unit subsidies for solar panel manufacturers to increase production. How might this intervention impact the market for solar panels in terms of allocative efficiency and overall consumer welfare?
Subsidies help manufacturers make more solar panels. Other options are incorrect because This option suggests that subsidies make companies less focus...
Per unit subsidies are to increased production as tax incentives are to what?
Tax incentives help businesses save money. Other options are incorrect because Some might think tax incentives make it easier for one company to win; ...
Which of the following statements accurately describe the effects of per unit subsidies on market dynamics? Select all that apply.
All the options misunderstand how per unit subsidies work in the market. Other options are incorrect because Some might think subsidies lower producti...
Per unit subsidies are intended to help firms produce more of a good to reach __________, where the price equals marginal cost.
Allocative efficiency happens when resources are used to produce the right amount of goods. Other options are incorrect because Some might think this ...
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