f a small country provides an export subsidy for exported grain, customers in the small country A. face higher grain prices B. benefit from lower grain prices C. benefit from expanded consumption levels D. do not experience any change in their level of consumption or prices
Question
f a small country provides an export subsidy for exported grain, customers in the small country A. face higher grain prices B. benefit from lower grain prices C. benefit from expanded consumption levels D. do not experience any change in their level of consumption or prices
Solution
To answer the question step by step:
-
Understand the concept of an export subsidy: An export subsidy is a government policy to encourage export of goods by providing financial assistance to the producers. This makes the goods cheaper for foreign buyers.
-
Impact on domestic prices: When a small country provides an export subsidy for grain, it incentivizes producers to sell more grain abroad because they receive additional financial benefits for exporting. This reduces the supply of grain available in the domestic market.
-
Supply and demand effect: With a reduced supply of grain in the domestic market, the price of grain within the country is likely to increase due to the basic economic principle of supply and demand.
-
Consumption levels: Higher domestic prices generally lead to reduced consumption levels within the country because consumers may not be able to afford the higher prices.
-
Conclusion: Given the above points, the correct answer is: A. face higher grain prices
Similar Questions
Export subsidy can be welfare improving trade policy for a domestic country if Group of answer choices the country that implements it is large it is used for agricultural products it cannot be welfare improving the country that implements it is small
Complete the paragraph with the correct form of the words. Use each word once.exportfreezeimportmanufactureproduceshiptransportFarmers' marketsA farmers' market is a market where farmers sell food directly to customers. Farmers 1 a wide variety of food including meat, cheese, eggs, and vegetables. The farmers sell to customers who live close by. This means it costs less to 2 the products compared with products which are 3 in other countries and then 4 . Products which are 5 from other countries are also more expensive because there is an import tax on them. Before companies in other countries 6 their products, they often need to 7 them to keep them in good condition. However, there is nothing better than something bought locally. That's why I support farmers' markets.
10) An export subsidy will cause the term of trade of the ________ country to ________ andwill ________ the countryA) importing; suffer; benefitB) exporting; improve; benefitC) importing; improve; harmD) importing; suffer; harmE) exporting; suffer; harm
4. Now consider country F in this model to be a small country. Suppose the amount of labor in country Fincreases.i. How does it affect the terms of trade of country F?ii. How does it affect the terms of trade of country H?iii. How does it affect the welfare of country F?iv. How does it affect the welfare of country H?
5) Suppose that a "small country" experiences growth strongly biased toward its export, clothA) this will tend to worsen the country's terms of trade.B) this will tend to improve the country's terms of trade.C) this will tend to worsen terms of trade for the country's trading partner.D) this will tend to improve terms of trade for the country's trading partner.E) this will have no effect on terms of trade for the country's trading partner
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.