If the government subsidizes the production of a good
A) an efficient outcome for producers occurs.
B) overproduction relative to the efficient quantity occurs.
C) a deadweight loss is created.
D) Both answers B and C are correct.

Question

Quizplus · Accepted Answer

Subsidies lower production costs, leading to overproduction beyond the efficient quantity, creating a deadweight loss due to resource misallocation.

If the Government Subsidizes the Production of a Good