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Q: From the point of view of consumer and producer surplus, what problem may be created when a country subsidizes the cost of energy to consumers to help alleviate the burden of higher energy
costs? A. It hurts the poor and benefits the rich. B. It leads to less fuel being used than the amount that maximizes consumer surplus. C. It encourages the consumption of too much fuel at the expense of other goods. D. It has no effect; consumers gain a surplus, but taxpayers lose the same amount because they must finance the subsidy.
A: C. It encourages the consumption of too much fuel at the expense of other goods.
aLorin|Points 80|
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Asked 7/1/2013 10:02:12 PM
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