Which of the Following Is a Consequence of Subsidies

question 20

Multiple Choice

Which of the following is a consequence of subsidies?

• A) Subsidies make domestic producers vulnerable to foreign competition.
• B) Subsidies lead to lowered production.
• C) Subsidies protect inefficient domestic producers.
• D) Subsidies produce revenue for the government.

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Definitions:

Equilibrium

A state of balance in a market situation where the quantity supplied equals the quantity demanded, often resulting in a stable market price.

Shift Left

In economics, it typically refers to a decrease in the supply or demand of a product, shown by a leftward shift of the supply or demand curve.

Supply

The sum of a certain item or service that consumers can obtain.

Equilibrium Quantity

The quantity of goods or services supplied that is equal to the quantity demanded at the market price.