2
QuizMultiple Choice

Trade and Development — Test

Question 2 • Economics and Personal Finance

Which of these is a positive incentive for domestic producers?

Answer
A
a tariff on clothes
B
a subsidy on imported cars
C
a subsidy on domestic oranges
D
a tariff on cars

Explanation

A subsidy is financial support that lowers producers’ costs or increases their returns, encouraging them to produce more. A subsidy on domestic oranges directly benefits domestic producers, so D is correct. Tariffs can protect domestic producers by making imports more expensive, but a tariff is not as direct a positive incentive as a subsidy.

AI-written and checked against the verified answer.

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