Jarkata heavily subsidizes the cost of fuel for ordinary Indonesians and faces a huge subsidy bill of as much as 138.6 trillion rupiah (S$22.3 billion) this year as a result of record high crude oil prices. The Straits Times, 2005. Critically examine whether the use of subsidies is the best solution for the Indonesian government in view of such oil prices. [15 marks]
Chapter: Government Regulation
Learn more about different forms of government regulation, such as taxation and subsidies, which affect the welfare of consumers and producers. In this context, find out whether subsidies was an effective strategy to manage the increase in oil prices in Jakarta.
07 August 2018