If a government provides an exporting firm with subsidies:
A)changes the payoff matrix in the foreign market.
B)unambiguously increase the welfare of the domestic economy.
C)it does not signal that it does not believe in free markets.
D)it will provide that firm with less incentives to be competitive.

Question

Quizplus · Accepted Answer

Subsidies can alter the competitive landscape in foreign markets by making the subsidized firm's products cheaper or more attractive, thereby changing the payoff matrix in terms of competitive advantage and market share.

If a Government Provides an Exporting Firm with Subsidies