Which of the following statements best describes the effects of subsidies?
A) A subsidy essentially lowers the prices of foreign goods rather than raising the prices of domestic goods.
B) A subsidy essentially raises the prices of domestic goods rather than lowering the prices of foreign goods.
C) A subsidy essentially lowers the prices of domestic goods rather than raising the prices of foreign goods.
D) A subsidy essentially raises the prices of foreign goods while also raising the prices of domestic goods.
E) A subsidy essentially lowers the prices of foreign goods while also lowering the prices of domestic goods.

Question

Quizplus · Accepted Answer

C) A subsidy is a government payment to help a domestic business compete with foreign firms; the subsidy lowers the prices of domestic goods rather than raising the prices of foreign goods.

Which of the Following Statements Best Describes the Effects of Subsidies