Which of the following best describes a subsidy ? A. Banks make low-interest loans to farmers. B. The government puts a tax of $100 per ton on wheat imports. C. The government pays farmers $100 per ton of wheat produced. D. Farmers pay the government $100 per ton of wheat produced.

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Mercer

Business

10 September, 15:13

Which of the following best describes a subsidy ? A. Banks make low-interest loans to farmers. B. The government puts a tax of $100 per ton on wheat imports. C. The government pays farmers $100 per ton of wheat produced. D. Farmers pay the government $100 per ton of wheat produced.

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Answers (1)

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Robert Herman · Answer 1

C. The government pays farmers $100 per ton of wheat produced.

Explanation:

Subsidy is grant / financial aid given by government to producers of a commodity, to enable its availability in markets at a lower price.

Government paying farmers $100 tone per wheat produced is a subsidy as : It is a financial assistance given by government to reduce wheat's price in markets.

Bank's low interest rate to farmers is just credit ease policy; Govt putting a tax on wheat imports is opposite of subsidy; Farmer paying govt $100 per unit wheat is also a form of tax (opposite to subsidy).