-In the above figure, if a subsidy is granted that generates an efficient allocation of resources, then the output level will be
A) zero.
B) 250 units per week.
C) 150 units per week.
D) 50 units per week.

Question

-In the above figure, if a subsidy is granted that generates an efficient allocation of resources, then the output level will be
A) zero. 
B) 250 units per week. 
C) 150 units per week. 
D) 50 units per week.

Quizplus · Accepted Answer

A subsidy that generates an efficient allocation of resources would shift the supply curve downward or the demand curve upward, depending on who receives the subsidy, leading to an increase in the quantity supplied and demanded until the market reaches a new equilibrium where the quantity is efficient. Without seeing the figure, the specific answer can't be directly inferred from the question, but typically, subsidies are designed to increase production and consumption from an inefficiently low level, suggesting that the correct answer involves an increase in output, not a decrease or maintenance of the status quo.

-In the Above Figure, If a Subsidy Is Granted That