Sample interview questions: How do you analyze the impact of government subsidies on specific industries?
Sample answer:
Analysis of Government Subsidies on Specific Industries
1. Economic Theory:
- Evaluate how subsidies distort market equilibrium, leading to potential overproduction or inefficient allocation of resources.
- Assess the potential impact on consumer and producer surplus, as well as overall economic welfare.
2. Empirical Analysis:
- Collect and analyze industry-specific data on production, costs, and prices to measure the direct impact of subsidies on key economic variables.
- Utilize econometric techniques, such as regression analysis, to isolate the causal effect of subsidies.
- Conduct sensitivity analysis to assess the robustness of findings under different assumptions.
3. Market Assessment:
- Examine the competitive landscape of the subsidized industry, including market structure, entry barriers, and technological progress.
- Determine whether subsidies have fostered innovation, competition, or rent-seeking behavior.
4. Distributional Effects:
- Analyze the distributional impact of subsidies across consumers, producers, and the government.
- Iden… Read full answer