Question16 Subsidies for health are likely to work for products for which there is potential for large learning effects False True ResetMaximum marks: 1 Flag question undefined

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BlackTom AI · Accepted Answer

The prompt asks us to evaluate whether subsidies for health are likely to work for products that have potential for large learning effects.
Option 1: False. If we assume subsidies are unlikely to work whenever learning effects are large, then we would be downplaying the role that repeated use and experience can have in driving down costs and improving outcomes. This misreads economics of learning, which suggests that greater usage or experience can reduce marginal costs and improve efficiency, making subsidies more impactful in such contexts.
Option 2: True. When there are large learning effects, cumulative use leads to substantial cost reductions and improved effectiveness over time. Subsidies can help unleash this potential by lowering initial barriers to adoption, encouraging early and widespread use, and accelerating the learning curve. As users gain experience, both the provider and consumer benefits can rise, making the subsidy more cost-effective and policy-relevant.
In sum, recognizing substantial learning effects aligns with the idea that financial incentives can boost adoption and longer-term efficiency gains in health-related products, supporting the notion that subsidies are more likely to work in these scenarios.

Question16 Subsidies for health are likely to work for products for which there is potential for large learning effects False True ResetMaximum marks: 1 Flag question undefined

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