Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The supply curve for EVs shifts to the right, lowering prices and increasing quantity, aligning production with social efficiency.
B
The demand curve for EVs shifts to the left, leading to decreased production and higher prices for consumers.
C
The subsidy will only benefit the producers, leading to increased profit margins without any effects on consumer prices.
D
The market for gasoline vehicles will benefit from the subsidy as consumers will prefer traditional vehicles due to lower costs.
Understanding the Answer
Let's break down why this is correct
Answer
When a government gives money to help produce and buy electric vehicles, it makes these cars cheaper for people. This encourages more people to buy them because they now cost less than before. As more electric vehicles are on the road, this can lead to less pollution and a cleaner environment, which is good for everyone. For example, if a family can buy an electric car for $5,000 less because of the subsidy, they might choose to go electric instead of buying a gas-powered car. Overall, the subsidy helps boost the electric vehicle market and creates positive effects for society.
Detailed Explanation
The subsidy makes it cheaper to produce electric vehicles. Other options are incorrect because This answer suggests that demand decreases, which is not true; This answer implies that only producers benefit, but consumers also gain from lower prices.
Key Concepts
Subsidies
Positive Externalities
Market Efficiency
Topic
Subsidies for Positive Externalities
Difficulty
medium level question
Cognitive Level
understand
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