Refer to the above table. How could the U.S. government justify its de

Refer to the above table. How could the U.S. government justify its decision to offer a subsidy to a profitable and successful business?

What will be an ideal response?

ANSWER

It could point out that this $10 million pump-priming expenditure results in a profit of $110 million. If Boeing paid a marginal income tax of 20%, this would net the government $55 million, which is more than 5 times the original subsidy, so that the decision may be justified not only in terms of benefit/cost considerations, but even in terms of pure budgetary terms.