For a small nation employing a production subsidy, if the
Consumers face the same price as before, the additional
Production generated by the subsidy will be purchased by:
A)new domestic consumers.
B)the export sector.
C)the financial sector.
D)the government.

Question

Quizplus · Accepted Answer

If the consumers face the same price as before, then the additional production generated by the subsidy will not be purchased by domestic consumers. The government may use some of the additional production, but it is unlikely that they will purchase all of it. The financial sector is not directly involved in purchasing goods and services. Therefore, the most likely option is that the additional production will be purchased by the export sector, which can then sell it in foreign markets at a lower price due to the subsidy, increasing the competitiveness of the nation's exports.

For a Small Nation Employing a Production Subsidy, If the