📚 Learning Guide
Per Unit Subsidies in Economics
easy

Per unit subsidies are to increased production as tax incentives are to what?

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Learning Path
Learning Path

Question & Answer
1
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2
Review Options
3
Learn Explanation
4
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Choose the Best Answer

A

Encouraging investment

B

Reducing competition

C

Raising consumer prices

D

Decreasing government spending

Understanding the Answer

Let's break down why this is correct

Answer

Per unit subsidies are payments made by the government for each unit of a good produced, encouraging producers to increase their output. Similarly, tax incentives are benefits given to businesses or individuals to encourage specific behaviors, like investing or hiring more workers. Just as per unit subsidies aim to boost production levels, tax incentives aim to stimulate economic activities, such as increasing investments in certain sectors. For example, if a government offers a tax break to a company for every new employee it hires, this encourages the company to create more jobs, similar to how a per unit subsidy encourages more production. Both tools are designed to promote growth in their respective areas by reducing costs for producers or incentivizing positive actions.

Detailed Explanation

Tax incentives help businesses save money. Other options are incorrect because Some might think tax incentives make it easier for one company to win; It's a common thought that saving money leads to higher prices.

Key Concepts

Per Unit Subsidies
Government Interventions
Market Efficiency
Topic

Per Unit Subsidies in Economics

Difficulty

easy level question

Cognitive Level

understand

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