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Economics (AS & A Level) · Oct / Nov 2024 · Paper 31 · Question 12

9708Methods and effects of government intervention in markets

A government removes a subsidy on a rural school bus service. What is the effect of this on the market for this bus service?

  1. ADeadweight loss decreases.
  2. BPrivate marginal costs increase.
  3. CPrivate marginal benefit decreases.
  4. DSocial marginal costs decrease.

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Correct answer: B. Private marginal costs increase.

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