Which of the Following Is a Problem of Subsidizing an Industry

question 184

Multiple Choice

Which of the following is a problem of subsidizing an industry to help it establish a world monopoly?

• A)All monopolies create deadweight losses.
• B)A nation may pick the wrong industry to subsidize.
• C)If both the domestic firm and the foreign firm enter the market,nations might end up subsidizing two money losing firms.
• D)both B and C

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Definitions:

Preferred Shares

A type of stock that gives holders preferential treatment over common stockholders, usually with fixed dividends and priority during liquidation.

Sale and Leaseback

A financial transaction where one sells an asset and immediately leases it back from the buyer, typically used for freeing up capital tied up in assets.

Providers of Financing

Entities or individuals that supply funds to another party, typically in the form of loans or investments.

Inflation

The rate at which the general level of prices for goods and services is rising, subsequently eroding purchasing power.