(Answered) If a country wants to subsidize some goods in an optimal

Management Studies

If a country wants to subsidize some goods in an optimal way, which statement is TRUE?

(a) Subsidies for commodities with low elasticities of demand result in larger deadweight losses than do subsidies for commodities with high elasticities of demand.

(b) All goods should receive the same subsidy in order to be optimal.

(c)The country should subsidize commodities with low elasticities of demand more than commodities with high elasticities of demand.

(d) The country should subsidize commodities with high elasticities of demand more than commodities with low elasticities of demand.

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