Because a subsidy raises marginal benefit, it can be used to eliminate the deadweight loss from overproduction.

Name: Because a subsidy raises marginal benefit, it can be used to eliminate the deadweight loss from overproduction.
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Question

Quizplus · Accepted Answer

A subsidy increases the marginal benefit, potentially leading to overproduction and increasing deadweight loss, rather than eliminating it.

Because a Subsidy Raises Marginal Benefit, It Can Be Used