WACE Economics ATAR Practice Questions - WACE ATAR Economics Units 3 & 4 (SCSA Year 12 Assessment) Exam

A production subsidy directly increases government expenditure without distorting the price paid by domestic consumers. A production subsidy increases government tax revenue, whereas a tariff requires government budget outlays. A production subsidy distorts consumer prices on the domestic market, while a tariff leaves domestic prices unchanged. A production subsidy causes a larger consumption deadweight loss than an equivalent import tariff.