What Is the Difference Between an Agricultural Export Subsidy and an Agricultural

question 65

Multiple Choice

What is the difference between an agricultural export subsidy and an agricultural production subsidy?

• A) There is no difference between an agricultural export subsidy and an agricultural production subsidy.
• B) An agricultural export subsidy applies only to exports, whereas an agricultural production subsidy applies to domestic production sold at home and in the export market.
• C) An agricultural export subsidy applies only to production sold in the home market, whereas an agricultural production subsidy applies to production sold in the export market.
• D) Both agricultural export subsidies and production subsidies apply to production sold in the home market and in the export market.

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Definitions:

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot increase proportionally.

Total Product Curve

A graphical representation showing how the total quantity of output changes with variation in the quantity of a single input, holding other inputs constant.

Marginal Returns

The additional output gained by adding one more unit of input, holding all other inputs constant.

Minimum Efficient Scale

The minimum efficient scale is the lowest point of production where a firm can achieve the economies of scale, reducing its cost per unit to the minimum.