Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
ongoing payment for each unit produced
B
payment based on total revenue
C
fixed cost subsidy
D
tax rebate for production
Understanding the Answer
Let's break down why this is correct
Answer
A lump sum subsidy is a one-time payment given to help someone financially, while a per unit subsidy is a payment made for each unit of a product or service sold or produced. This means that instead of receiving all the money at once, a person or business gets a specific amount of money for every unit they sell. For example, if a farmer receives a per unit subsidy of $2 for every bushel of corn they sell, they will get $2 each time they sell a bushel, rather than a single payment for all their corn at once. This approach encourages production because the more they produce, the more subsidy they receive. So, you can think of the relationship as lump sum subsidy being to one-time payment as per unit subsidy is to recurring payments based on production.
Detailed Explanation
A per unit subsidy gives money for every single item made. Other options are incorrect because Some might think this means getting money based on how much you earn overall; A fixed cost subsidy is a set amount given, no matter how much you produce.
Key Concepts
Types of Subsidies
Government Intervention
Market Dynamics
Topic
Types of Subsidies
Difficulty
easy level question
Cognitive Level
understand
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