Which group directly benefits from subsidies in a market economy?

• A. Sellers
• B. Exporters
• C. Importers
• D. Producers

Answer: (D)

Verified step by step guidance

1. Understand the concept of a subsidy: A subsidy is a financial assistance provided by the government to reduce the cost of production or encourage the supply of a good or service.
2. Identify the recipients of subsidies: Subsidies are typically given to producers or sellers to lower their production costs, enabling them to supply more at a lower price.
3. Analyze the options: Sellers (producers) receive subsidies directly, exporters may receive subsidies but only if the government targets them specifically, and importers generally do not receive subsidies as subsidies aim to support domestic production.
4. Conclude that the group that directly benefits from subsidies in a market economy is the producers (sellers), as they receive financial support to produce goods more cheaply.
5. Remember that subsidies can lead to increased supply, lower prices for consumers, and potentially greater market efficiency depending on the context.