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    Hi
    I needed help for this question. I can answer these types of questions but i have no idea what to put down and talk about, any help will be appreciated

    QUESTION:
    "Discuss the extent to which a subsidy given to producers might encourage an increase in the consumption of a product such as pu’er tea which generates positive externalities."

    Thanks for any help
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    This is a Unit 1 OCR question.
    Define subsidy, explain how a subsidy works, draw the subsidy diagram showing how the subsidy increases consumption and moves us closer to the social optimum. Then explain three difficulties with a subsidy as your evaluation. Conclude with how successful a subsidy is likely to be in this case.
    Dr Mark Potts
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    (Original post by mapotts53)
    This is a Unit 1 OCR question.
    Define subsidy, explain how a subsidy works, draw the subsidy diagram showing how the subsidy increases consumption and moves us closer to the social optimum. Then explain three difficulties with a subsidy as your evaluation. Conclude with how successful a subsidy is likely to be in this case.
    Dr Mark Potts

    Thanks mate. Just curious would this be a balanced argument? (Both sides advantages and disadvantages? )
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    Yes as long as you use the diagram and explanation to say how the subsidy will encourage consumption and then say what the disadvantages of subsidies are.
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    (Original post by mapotts53)
    Yes as long as you use the diagram and explanation to say how the subsidy will encourage consumption and then say what the disadvantages of subsidies are.
    For F581 OCR it will require key words included to merit L3 such as reducing underconsumption and leading to greater allocative efficiency
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    (Original post by Junaid12)
    Hi
    I needed help for this question. I can answer these types of questions but i have no idea what to put down and talk about, any help will be appreciated

    QUESTION:
    "Discuss the extent to which a subsidy given to producers might encourage an increase in the consumption of a product such as pu’er tea which generates positive externalities."

    Thanks for any help
    Hey, I have uploaded my answer 18/18 answer from January 2013 which was on subsidies:

    http://www.thestudentroom.co.uk/albu...hmentid=271211

    Hope that helps.
 
 
 
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