Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It typically lowers the market price of agricultural products.
B
It has no effect on the market price.
C
It raises the market price of agricultural products.
D
It makes agricultural products less accessible.
Understanding the Answer
Let's break down why this is correct
Answer
A subsidy is a financial support given by the government to help farmers produce their crops. When farmers receive a subsidy, it lowers their costs of production. This means they can sell their agricultural products, like wheat or corn, at a lower price. As a result, the overall market price of these products tends to decrease because there is more supply available. For example, if the government gives farmers money to grow more corn, they might sell it for $3 a bushel instead of $4, making it more affordable for consumers.
Detailed Explanation
A subsidy helps farmers by giving them money. Other options are incorrect because Some might think subsidies don't change prices at all; It's a common mistake to think subsidies raise prices.
Key Concepts
Subsidies
Topic
Effects of Taxes and Subsidies
Difficulty
easy level question
Cognitive Level
understand
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