A fixed-quantity subsidy differs from food stamps in that:
A)the fixed-quantity provides a minimum quantity that can be supplemented by additional consumer purchases while additional quantities cannot be purchased with food stamps.
B)the fixed-quantity subsidy increases consumer welfare more than food stamps.
C)the fixed-quantity subsidy cannot be supplemented by additional purchases while the consumer can purchase additional quantities with food stamps.
D)the fixed-quantity subsidy cannot move consumers to a higher indifference curve unlike food stamps.

Question

Quizplus · Accepted Answer

A fixed-quantity subsidy provides a set amount of a good or service that cannot be supplemented by additional purchases, while food stamps provide a set dollar amount that can be used to purchase additional quantities if desired. Therefore, choice C is correct. Choices A, B, and D are all incorrect because they are either not true or not related to the difference between a fixed-quantity subsidy and food stamps.

A Fixed-Quantity Subsidy Differs from Food Stamps in That