Th1.4: Disadvantages of Subsidies Flashcards
1
Q
What are the four disadvantages?
A
high opp cost
difficult to target
inefficient
difficult to remove
2
Q
High opportunity cost
A
the government has to spend a large amount of money
3
Q
Difficult to target
A
since the exact size of the externality is unknown
4
Q
Inefficient
A
producers to become inefficient, especially if they are in a place for a long time
5
Q
Difficult to remove
A
once introduced, hard to remove
6
Q
What are some examples of subsidies?
A
biofuels, solar panels, apprenticeship schemes, wind farms and rail industries
