The Agricultural Department in Country A pays wheat farmers a subsidy to allow them to price their goods below the cost of production to stay in business. This action allows for which of the following?

Question

Quizplus · Accepted Answer

By allowing wheat farmers in Country A to price their goods below the cost of production, it enables them to compete both against imported wheat and on the international wheat market. Thus, options (A) and (B) are correct, making the answer (D). Option (C) is incorrect as it suggests that importers would benefit from this subsidy, which is not the case.

The Agricultural Department in Country a Pays Wheat Farmers a Subsidy