The reason why public subsidization of industries in less-developed countries causes slow economic growth is that:
A) when companies face no competition, there is no incentive for them to improve their production.
B) too much of the taxpayer's money is spent in these programs.
C) consumers tend to develop an aversion for the purchase of subsidized goods and services.
D) subsidies tend to create too much competition for products.
E) subsidization creates shortage in the product market.

Question

Quizplus · Accepted Answer

When companies receive public subsidization and face no competition, they lose the incentive to improve their production and become more efficient. This leads to slower economic growth rather than the intended boost from the subsidies.

The Reason Why Public Subsidization of Industries in Less-Developed Countries