Question: (a) (i) Explain why from an individual producer's perspective, a general subsidy on production costs is preferable to a subsidy on only one factor of

(a) (i) Explain why from an individual producer's perspective, a general subsidy on production costs is preferable to a subsidy on only one factor of production (i.e. a specific subsidy) when the costs of the two policies to the government are identical. (30 marks) (i) Describe briefly how other economic factors can influence the government's choice between a general subsidy and a specific subsidy. (30 marks)(ii) Describe briefly how other economic factors can influence the government's choice between a general subsidy and a specific subsidy. (30 marks)

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