If the home country's government grants a subsidy on a domestically produced good,domestic producers tend to:

Question

Quizplus · Accepted Answer

When a domestic subsidy is granted by the government on domestically produced goods, domestic producers tend to increase their level of production to take advantage of the subsidy and make profits. This is because they can sell their goods at lower prices without incurring losses. Thus, choice B is the best choice. Option A is not entirely accurate because the subsidy could also benefit domestic consumers in the form of lower prices. Option C is an irrelevant option, and option D is incorrect.

If the Home Country's Government Grants a Subsidy on a Domestically