Practice Questions
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Which of the following best illustrates the use of cost-benefit analysis in determining subsidies for positive externalities?
This option shows how we weigh the costs of pollution control against the health benefits. Other options are incorrect because This option compares pr...
What is one potential benefit of government subsidies aimed at promoting positive externalities?
Subsidies help lower the cost of making good things, like clean energy. Other options are incorrect because Some might think subsidies cause problems ...
Which of the following best illustrates the effectiveness of consumption subsidies in addressing positive externalities?
When the government gives money to help people buy electric cars, more people choose them. Other options are incorrect because A tax on sugary drinks ...
How do subsidies for positive externalities relate to government intervention in public goods, and what is their impact on deadweight loss?
Subsidies help increase the production of public goods. Other options are incorrect because This answer suggests that subsidies make public goods less...
How do subsidies for positive externalities relate to welfare economics, public goods, and deadweight loss in a market economy?
Subsidies help produce more positive externalities, like education or clean energy. Other options are incorrect because Some might think subsidies onl...
What is the primary purpose of providing subsidies for positive externalities in an economy?
Subsidies help make things cheaper for producers. Other options are incorrect because Some might think subsidies are mainly for the government to earn...
What is the primary purpose of government subsidies for positive externalities?
Subsidies help make things cheaper to produce. Other options are incorrect because Some might think subsidies raise production costs; It's a common mi...
What is the primary purpose of government subsidies aimed at positive externalities?
Subsidies help make good things cheaper. Other options are incorrect because Some might think subsidies raise costs for companies; It's a common mista...
Subsidies for positive externalities primarily aim to reduce the gap between __________ and social costs, encouraging more production of beneficial goods.
Subsidies help lower private costs for producers. Other options are incorrect because Marginal costs are the cost of making one more item; Total costs...
A government decides to implement a subsidy for electric vehicles (EVs) to encourage their production and consumption. Which of the following best explains the expected economic outcome of this subsidy?
The subsidy makes it cheaper to produce electric vehicles. Other options are incorrect because This answer suggests that demand decreases, which is no...
If a government provides subsidies for education, what is the most likely outcome on the market for education services?
When the government gives money for education, schools can offer more classes. Other options are incorrect because Some might think that more money me...
Which of the following statements about subsidies for positive externalities are true? Select all that apply.
Other options are incorrect because Some people think subsidies always help match private and social benefits; It's a common belief that subsidies alw...
In a market where a positive externality exists, how does a subsidy impact the equilibrium quantity and social efficiency?
A subsidy helps lower the cost for producers. Other options are incorrect because This answer suggests that a subsidy would reduce the amount produced...
How do subsidies for positive externalities affect market equilibrium and social welfare?
Subsidies help lower the cost for producers. Other options are incorrect because This answer suggests that only producers gain; This option says subsi...
A local government decides to provide subsidies for a new vaccination program aimed at improving public health. If the government successfully implements these subsidies, what is the most likely outcome in terms of market efficiency and production levels?
When the government gives money for vaccinations, it helps lower the cost. Other options are incorrect because This answer suggests that fewer people ...
Arrange the following steps in the correct order to demonstrate how subsidies for positive externalities can lead to increased market efficiency: A) Government provides a subsidy to producers, B) Supply curve shifts to the right, C) Increased production aligns with socially optimal output, D) Consumers benefit from lower prices and increased access.
First, the government gives money to producers. Other options are incorrect because This option suggests that the supply curve shifts before the gover...
Subsidies for positive externalities are to market efficiency as government regulation is to: ?
Subsidies help improve market efficiency by encouraging good things, like education. Other options are incorrect because Consumer surplus is about how...
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