Effects of Government Intervention in Markets
AP Microeconomics · Flashcards
AP MICROECONOMICS · FLASHCARDS
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QUESTION
What causes deadweight loss in a market?
QUESTION
How does a subsidy affect producer surplus?
QUESTION
Identify one effect of a subsidy on market equilibrium.
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ANSWER
It lowers the price and increases the quantity sold. Subsidy shifts supply right, creating new equilibrium.
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