When deciding whether it is a good idea to subsidize, we must compare the present value of the net gain in profits with the:
A) taxes paid by the producers on those profits.
B) cost of the subsidy.
C) reduced profits in other nations.
D) timeliness of making the decision.

Question

Quizplus · Accepted Answer

When deciding to subsidize, we must consider the cost of the subsidy. While taxes paid by producers and the potential reduction in profits in other nations may be important factors to consider, they are not directly related to the decision of whether to provide a subsidy. The timeliness of making the decision may also be important, but it is not a factor that directly affects the present value of the net gain in profits.

When Deciding Whether It Is a Good Idea to Subsidize