The welfare effect of an excise subsidy indicates that:
A)the consumer is better off than without the subsidy.
B)the consumer is indifferent between an excise subsidy and a cash grant.
C)excise subsidies should not be used by the government.
D)government officials know what is better for low-income families than the families themselves.

Question

Quizplus · Accepted Answer

The welfare effect of an excise subsidy indicates that the consumer is better off than without the subsidy. This is because the excise subsidy reduces the price of goods for the consumer, leading to an increase in their purchasing power and higher welfare.

The Welfare Effect of an Excise Subsidy Indicates That