Prices as Signals
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Question (English)
When electricity and water are subsidised, they are:
- Used more efficiently
- Used wastefully without concern for scarcity ✓ Correct
- Consumption decreases
- Quality improves
Explanation:
Correct Answer Explanation
When subsidised, they are used wastefully without concern for scarcity.
Key Points:
- Prices are signals about availability.
- Subsidies distort price signals.
- Farmers may cultivate water-intensive crops in water-scarce regions.
- Fertiliser subsidies can cause overuse harmful to environment.
📚 About this Topic — CH-2: INDIAN ECONOMY 1950–1990
This multiple choice question is from CH-2: INDIAN ECONOMY 1950–1990, Indian Economic Development, NCERT Books. It has 4 options with a detailed explanation of the correct answer. Practice more MCQs from CH-2: INDIAN ECONOMY 1950–1990 to strengthen your preparation.
