Governments subsidize increasing-returns-to-scale industries to help those industries become large enough to compete in global markets.

Question

Quizplus · Accepted Answer

Increasing-returns-to-scale industries are those in which the cost of producing a unit of output decreases as the level of production increases. This can lead to a situation where larger firms have a competitive advantage over smaller firms. Governments may provide subsidies to these industries in order to help them become large enough to compete in global markets. This is done to promote economic growth and job creation in the country.

Governments Subsidize Increasing-Returns-To-Scale Industries to Help Those Industries Become Large