Suppose that the training, skills, and attitudes received by employees in the computer gaming development industry have positive spillover effects as workers leave the industry and move to other jobs. The specificity rule suggests that the best way to achieve more employment in this industry is to:
A)impose a tariff on the importation of computer games.
B)remove all sales taxes from the purchases of computer games.
C)give computer game developing firms a subsidy tied to their level of employment.
D)tax production of computer games.

Question

Quizplus · Accepted Answer

The specificity rule suggests that the best way to achieve more employment in a specific industry is to provide targeted subsidies to firms in that industry. Giving computer game developing firms a subsidy tied to their level of employment would incentivize them to hire more workers and potentially create positive spillover effects in the labor market as these workers move on to other jobs with the skills and training they received in the industry. Imposing a tariff or taxing production would likely discourage growth in the industry and could have negative spillover effects in the labor market. Removing sales taxes on the purchases of computer games could encourage consumer demand for games, but it would not necessarily lead to more employment in the industry.

Suppose That the Training, Skills, and Attitudes Received by Employees