Scenario: Montesia is predominantly a producer and exporter of manufactured goods. However, it imports several agricultural products.
-Refer to the scenario above.Recently,the government of Montesia has provided an export subsidy for some cash crops.Which of the following is likely to occur in this case?

Question

Quizplus · Accepted Answer

An export subsidy will make it more profitable for Montesian producers to export cash crops, as they will receive additional financial support from the government. This is likely to increase the volume of cash crop exports. Choices A, C, and D are unlikely outcomes. The government's revenue is likely to decrease as a result of the subsidy, as they will be providing financial support to Montesian producers. Domestic producers of cash crops are likely to benefit from the subsidy, as it will increase the demand for their products. Domestic consumers of cash crops are unlikely to be affected in any significant way by the subsidy.

Scenario: Montesia Is Predominantly a Producer and Exporter of Manufactured