If making computer chips yields greater spillovers than making potato chips,what do some economists argue that government should do
A)encourage the production of computer chips with subsidies
B)discourage the production of potato chips with taxes
C)encourage the production of potato chips with subsidies
D)discourage the production of computer chips with regulations

Question

Quizplus · Accepted Answer

Economists argue that government should encourage the production of computer chips with subsidies because they yield greater spillovers. By providing subsidies, the government can reduce the cost of production and make it more attractive for firms to invest in making computer chips, which will lead to more innovation and greater spillover effects. Discouraging the production of potato chips with taxes or regulating the production of computer chips would not necessarily lead to the desired result of promoting innovation and spillovers, and may result in unintended consequences. Encouraging the production of potato chips with subsidies would not make sense, as it is not related to the objective of promoting innovation and spillovers.

If Making Computer Chips Yields Greater Spillovers Than Making Potato