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From course:

Economics A Level (DONEEEEEEE)

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Question:

What are the Disadvantages of Subsidies in the Market?

Author: eric_galvao



Answer:

-Difficult to put a Value on the Benefit of the Positive Externality -Subsidies have an Opportunity Cost -Subsidies can lead to Producers less Efficient and more Reliant - Less Innovation to Reduce Costs -This is dependent [The Effectiveness] on the Elasticity of Goods. Inelastic Goods does naught -Subsidised Goods may not be as Good as the Goods they want to Replace, so therefore it may be Wasted


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