Asked by Morgan Beasley on Jul 02, 2024

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​Subsidies can destroy wealth because

A) ​subsidies move assets from lower- to higher- valued uses
B) subsidies move assets from higher- to lower- valued uses
C) subsidies help producers only
D) ​subsidies help consumers only

Subsidies

Financial support provided by governments to individuals, businesses, or institutions to promote certain activities deemed beneficial.

Higher-Valued Uses

The allocation of resources or goods to their most profitable or beneficial applications, typically where they contribute the most to welfare or profitability.

Lower-Valued Uses

Activities or allocations of resources that do not maximize potential value or returns compared to other uses.

  • Gain an understanding of the mechanisms through which wealth is generated or lost due to assorted economic strategies and actions.
  • Investigate the consequences of state interference in the economy, particularly through taxes, price regulations, and grants.
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SR
simran roopra6 days ago
Final Answer :
B
Explanation :
Subsidies often encourage the production of goods and services that are not valued highly by consumers, and the cost of the subsidy must be borne by taxpayers, causing a loss of potential wealth. This means that subsidies move assets from higher- to lower-valued uses, destroying wealth in the process.