Question

Discuss the benefits and losses of subsidies

Answer 1

#1. Production subsidy

This type of subsidy is provided in order to encourage the production of a product. In order for manufacturers to increase their productio…

#2. Consumption subsidy

This happens when the government offsets the costs of food, education, healthcare, and water.

#3. Export subsidy

An obvious fact is that a country or state earns from its exports and exports help to balance its economy.

Answer 2

Answer:

Though one of the advantages of subsidies is the greater supply of goods, a shortage of supply can also occur. This is because lowered prices can lead to a sudden rise in demand that many producers may find very hard to meet. Ultimately, it can lead to very high demand that causes an increase in prices.