10
QuizMultiple Choice

Trade Barriers

Question 10 • GA-GSE Personal Finance and Economics

Which of these is a positive incentive for domestic producers?

Answer
a
a subsidy on imported cars
a
a tariff on cars
a
a subsidy on domestic oranges
a
a tariff on clothes

Explanation

A subsidy is financial support that lowers producers’ costs or boosts their income, encouraging them to produce more. A subsidy on domestic oranges directly benefits domestic producers. A tariff on cars or clothes may protect domestic producers from foreign competition, but it is not a direct positive incentive to produce a particular domestic good; a subsidy on imported cars benefits importers or foreign producers instead.

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