subsidy saq. (1 Viewer)

[kunny funt]

hey what did u guys answer for the 4 mark subsidy question. i think it was somthing to do with effect on other countries that aren't subsidised or somthing by looking at the diagram.

 

[Sweet_Lemon]

wat's the question?

 

[SpaceMonkey]

Umm... the country that implemented the subsidy would be more competitive in foreign markets since the producers produce products (uhh huh) at a cheaper price, therefore they sell their product in foreign markets at a cheaper price compared to domestic prices of the country, which did not implement a subsidy.

The effect would be more demand for the cheaper product and less demand for the comparitivly expensive domestic product... domestic producers lose out to competition, loss of jobs blah blah blah.

edit: I refered to the diagram when I talked about comparative prices.

 

[bakerlog]

^^yea. well there was probably two ways u could've gone about that. i thought of doing it your way - which would be the assumption that the new world price was actually an "average" of the world price.

i said to adjust to the new world price, countries without the subsidy would have to reduce their supply to the left of Q. then talked about effect on balance of goods and services etc.. could b wrong

 

[Shuter]

^^yea. well there was probably two ways u could've gone about that. i thought of doing it your way - which would be the assumption that the new world price was actually an "average" of the world price.

i said to adjust to the new world price, countries without the subsidy would have to reduce their supply to the left of Q. then talked about effect on balance of goods and services etc.. could b wrong

Yes I said something about supply of the lower price cood would now change increase by Q1-Q2 causing the rest of the world to then supply less of the goods as there is a new lower price from it or something. I don't know, I was a little confused by exactly what the diagram exactly was representing.



edit: That was terrible grammar, I don't know what I was thinking.

 

[PhiL]

Yeh i said all that stuff too like the ones without subsidies would have to become more competitve, efficient etc to compete.

I also said that they might appeal to the WTO cause under new WTO agreements, the use of new export subsidies is prohibited and used some eg. how the EU's sugar export subsidies are now deemed illegal by the WTO and they have to change it