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Consider the following statements.
1. Subsidy is a payment that a government makes to a producer to supplement the market price of a commodity
2. Subsidies can keep consumer prices low while maintaining a higher income for domestic producers
Which of the statements/statements are not correct?
- a)1 Only
- b)2 Only
- c)Both 1 and 2
- d)None of them
Correct answer is option 'D'. Can you explain this answer?
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Consider the following statements.1. Subsidy is a payment that a gove...
Both the statements are correct.
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Consider the following statements.1. Subsidy is a payment that a gove...
Statement 1: Subsidy is a payment that a government makes to a producer to supplement the market price of a commodity.
Explanation:
A subsidy is a financial assistance provided by the government to certain industries or producers to help them reduce the cost of production or to encourage the production of certain goods or services. It is a form of government intervention in the market to achieve specific objectives.
The statement is correct. Subsidies are indeed payments made by the government to producers. These payments can be in the form of direct cash transfers, reduced taxes, or other forms of financial assistance.
Statement 2: Subsidies can keep consumer prices low while maintaining a higher income for domestic producers.
Explanation:
Subsidies can have various effects on consumer prices and the income of domestic producers. In some cases, subsidies can indeed help keep consumer prices low by reducing the cost of production for producers. This, in turn, can lead to lower prices for consumers.
However, the impact of subsidies on domestic producers' income is not always straightforward. While subsidies can provide financial support to producers, they can also distort market dynamics and create inefficiencies. In some cases, subsidies can lead to overproduction or discourage innovation, which can negatively affect the income of domestic producers in the long run.
Overall Explanation:
Both statements are correct. Subsidies are payments made by the government to producers to supplement market prices. They can help keep consumer prices low in some cases while providing financial support to domestic producers. However, it is important to note that subsidies can have both positive and negative effects on the economy, and their impact on consumer prices and producer income can vary depending on the specific context and objectives of the subsidy program.
Therefore, the correct answer is option D, None of them.
Explanation:
A subsidy is a financial assistance provided by the government to certain industries or producers to help them reduce the cost of production or to encourage the production of certain goods or services. It is a form of government intervention in the market to achieve specific objectives.
The statement is correct. Subsidies are indeed payments made by the government to producers. These payments can be in the form of direct cash transfers, reduced taxes, or other forms of financial assistance.
Statement 2: Subsidies can keep consumer prices low while maintaining a higher income for domestic producers.
Explanation:
Subsidies can have various effects on consumer prices and the income of domestic producers. In some cases, subsidies can indeed help keep consumer prices low by reducing the cost of production for producers. This, in turn, can lead to lower prices for consumers.
However, the impact of subsidies on domestic producers' income is not always straightforward. While subsidies can provide financial support to producers, they can also distort market dynamics and create inefficiencies. In some cases, subsidies can lead to overproduction or discourage innovation, which can negatively affect the income of domestic producers in the long run.
Overall Explanation:
Both statements are correct. Subsidies are payments made by the government to producers to supplement market prices. They can help keep consumer prices low in some cases while providing financial support to domestic producers. However, it is important to note that subsidies can have both positive and negative effects on the economy, and their impact on consumer prices and producer income can vary depending on the specific context and objectives of the subsidy program.
Therefore, the correct answer is option D, None of them.
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Consider the following statements.1. Subsidy is a payment that a government makes to a producer to supplement the market price of a commodity2. Subsidies can keep consumer prices low while maintaining a higher income for domestic producersWhich of the statements/statements are not correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'D'. Can you explain this answer?
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