Which of the following statements about an export subsidy on a particular product is accurate?
A)An export subsidy can switch the product from being exported to being imported.
B)An export subsidy reduces the amount available in the domestic market of the exporting country and increase the amount imported by the foreign country.
C)An export subsidy increases the price paid by foreign buyers, relative to the price that local consumers pay for the product.
D)An export subsidy increases the net national well-being of a large exporting country.

Question

Quizplus · Accepted Answer

An export subsidy makes the product cheaper for foreign buyers, which increases the amount being exported. This decrease of price favors foreign consumption over domestic consumption. As a result, the amount of the product available in the domestic market of exporting countries is reduced while the amount of export to foreign countries would increase.

Which of the Following Statements About an Export Subsidy on a Particular