# Hard to understand economics prompt--Help please!



## vanillaicecream (Jun 24, 2012)

I'm taking Intro to Microeconimics and we have to write a 6-7 page paper over this prompt:

Do government subsidies for new technology or services lead to the desired outcome? Use 3-4 historical examples to support your position. 

I just cant figure out really what this means. My friends mom said that it could be anything like welfare or obamacare, student loans. But I asked my prof quickly after class once and he said something along the lines of "they're subsidies for more directly applied technologies" The only example that I remember he gave was solar panels. So....... If I were to do it on solar power or alternative energy (can't think of anything else), what exactly would I even be researching?


Thank you in advance!!


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## Scrabbletray (Apr 27, 2014)

Pretty sure it just means government sponsored research like subsidies for solar power in order to try and help the solar industry grow or research grants to fight cancer or AIDS to try and find cures for these diseases.


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## dragthewaters (Feb 9, 2013)

I believe the "technologies" part refers to research grants that various government organizations (ie. the NIH, NSF, USDA, military etc.) give to researchers to develop new technologies. "Services" is broader...I'm not sure whether the professor is referring to things like social service programs, or services that are technology-related like the government hiring military contractors or something. This is a really vague question. "Desired outcome" by whose standards?


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## vanillaicecream (Jun 24, 2012)

@a1b2c3d4 @thismustbetheplace

Thank you soo much!! I was hoping to be able to do it over some sort of health research, so I think I'll try to find a specific area of interest and ask him about that. 
@thismustbetheplace, that's another thing I was confused about. Would I just research researchers to see if they got any good results from the research they were conducting with government money? 

I may have to go into his office sometime, it kinda makes me nervous though, specially since I've accidentally his class a couple of times and he always calls you out on being absent (<20 people class)....


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## Scrabbletray (Apr 27, 2014)

I'm not sure you should confine it just to the healthcare industry as government subsidies are very broad and that would be liming yourself. However there are definitely a plethora of possible topics in the healthcare industry. For example, the mortality rate of AIDS has been significantly reduced by new antiretroviral drugs. The problem will be proving that government subsidies played a large role in that since NIH spreads grants out all over the place and it might take a lot of research to link a specific drug back to them.


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## ForestPaix (Aug 30, 2014)

government subsidies do cover a range of different thing, as the person above me said.
You should talk about everything, the health care, the solar power projects, research, education.


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## tanstaafl28 (Sep 10, 2012)

*Do government subsidies for new technology or services*...

The U.S. Government subsidizes a lot of new technologies and services in an attempt to produce some form of beneficial outcome, either for the government, encourage private investment, or of direct benefit to the American people. 

The U.S. government subsidized ARPANET back in 1969, for example. This was a Defense Department idea to create a communications network that would not be vulnerable to EMPs produced by a nuclear attack. This would eventually became the Internet, and led to the World Wide Web. All government involvement in the Internet was removed by 1995, when the last backbone went private.


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## Tezcatlipoca (Jun 6, 2014)

Also think about the subsidies for ethanol produced from corn


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## Scrabbletray (Apr 27, 2014)

Tezcatlipoca said:


> Also think about the subsidies for ethanol produced from corn


That would be a good example of a subsidy NOT having the desired outcome. :laughing:

Well, at least not the desired outcome that was stated. It definitely had the desired outcome of raising corn prices which a lot of politicians in corn growing states that support it wanted. Whether you consider subsidies for ethanol to be designed to help the environment or to help farmers is debatable.


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## vanillaicecream (Jun 24, 2012)

I asked my professor about it today and he said that I could talk about different industries like the health industry and alternative energy and everything. About outcomes, he said to remember that when the government gives money to one person, they're NOT giving it to another. And then he said to read some article about Vanderbilt and Transatlantic shipping which explains subsidies well, but I couldn't find it, so I've emailed him about that for now.

*I'm sorry I don't know if a lot of these answers make sense, I'm kinda rushing to answer this, I have class in like 10 minutes  *
@a1b2c3d4 
Oh okay okay... I'll definitely incorporate more than one industry then. Do you think I should just use specific drugs or whatever as my examples and just talk about how they were possible due to the money that organizations get from the government? Hmm... I don't know if what I just said makes sense...
@tanstaafl28
So when you say "benefit", this would be something developed as a result? So if I found information on some research that, say, found a new alternative energy that's starting to be used (I have no clue if there is something like this, although there probably is ) or something and that research was government funded, that could be a benefit? Like the fact that it's being used by public or something now? Sorry, I don't think that made sense....
@Tezcatlipoca @tanstaafl28
Hahahaha, that's interesting to know! That's what my dad researched... Methods of producing ethanol using corn (and agricultural waste (I think)) :laughing:


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## tanstaafl28 (Sep 10, 2012)

@vanillaicecream



> So when you say "benefit", this would be something developed as a result? So if I found information on some research that, say, found a new alternative energy that's starting to be used (I have no clue if there is something like this, although there probably is ) or something and that research was government funded, that could be a benefit? Like the fact that it's being used by public or something now? Sorry, I don't think that made sense....


"Benefit" versus "intended outcome" does not always come together the way we might think. 

I believe your professor is asking you to provide examples as to _whether or not there is a clear benefit_ when the government offers economic incentives (or directly funds) research and development of new technologies. 

Can you prove whether or not it is a good idea for governments to encourage certain lines of research and development? Can you construct a logical argument and provide evidence to back up your stance?


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## jbking (Jun 4, 2010)

Canadian Government ecoAUTO Rebate Program would be a Canadian example where the government subsidized fuel efficient cars that could be an example to promote the sale of Hybrid vehicles.

Similarly, you could dig into Scientific Research and Experimental Development Tax Incentive Program for another Canadian program if you want to go beyond what the US government backs that could be of interest.


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