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When Does a Subsidy to a Business or a Consumer

Question 10

Multiple Choice

When does a subsidy to a business or a consumer result in a more efficient allocation of a resource?


A) When the good being produced or consumed is not scarce
B) When the good being produced or consumed generates a negative externality
C) When the good being produced or consumed generates a positive externality
D) When the equilibrium price of the good is one that consumers don't like

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