Question

When a home country's government grants a subsidy on a domestically produced good, domestic producers are likely to:

a) Experience increased competition
b) Face reduced production costs
c) Encounter trade restrictions
d) Witness consumer boycotts

Answer 1

When a government grants a subsidy on a domestically produced good, domestic producers are likely to face reduced production costs and gain a competitive advantage.

Step-by-step explanation:

When a home country's government grants a subsidy on a domestically produced good, domestic producers are likely to face reduced production costs. The subsidy lowers the cost of production for domestic producers, allowing them to sell their goods at a lower price. This can give them a competitive advantage in the market, potentially leading to increased sales and market share. Additionally, the subsidy may also encourage domestic producers to invest in new technologies or expand their production capacity, further reducing costs.