Question

Domestic telecommunication companies in the United States are struggling due to foreign competition. How can the US government help to resolve this situation?
A. The government should implement subsidies as they would help domestic businesses be able to afford to lower the prices of their goods and thus become more competitive.

B. The government should implement subsidies as they would limit the amount of foreign goods available to consumers and thus help domestic producers become more competitive.

C. The government should implement quotas as they would help domestic businesses lower the costs of labor and capital goods on which they rely and thus become more competitive.

D. The government should implement quotas as they would artificially raise prices for foreign goods relative to domestic goods and thus help domestic producers become more competitive.

Answer 1

Answer:

A. The government should implement subsidies as they would help domestic businesses be able to afford to lower the prices of their goods and thus become more competitive.

Explanation:

A subsidy is a direct or indirect benefit given to an institution, business, or individuals. Usually, subsidies are given by the government. The purpose of subsidies is to relieve the recipients of some burden. They may be in the form of cash or tax incentives.

Offering subsidies to the domestic telecommunication service will help them compete favorably with international competition. They will afford to provide their services at reduced prices.