What is the primary difference between a subsidy in a small country and a large country?
A) The large country is the only buyer of the product in the world market.
B) The small country does not produce any of the product.
C) The large country is able to influence the world price of the product.
D) There is no difference between the large country and small country.

Question

Quizplus · Accepted Answer

In a large country, their production and consumption levels are significant enough to have an impact on the world market. Therefore, if the country decides to subsidize a certain product, it can affect the world price of the product. In a small country, their production and consumption levels are not significant enough to have an impact on the world market, and the subsidy will only affect their domestic market.

What Is the Primary Difference Between a Subsidy in a Small