Question

decision point: how subsidies will affect your sales
you have decided to continue on with hiring an independent agent to sell your solar kits in india. much to your surprise, the indian government has announced that it intends to subsidize local manufacturers of solar kits in india.
how will this impact the sales of your products?
select an option from the choices below and click submit.

• it will make your products more expensive in india than those of local competitors.
• the number of solar kits you import will be restricted by the indian government.
• your solar kits will be more expensive because they are being taxed by the indian government.
• you will be unable to import any solar kits into india.

Explanation:

Subsidies to local manufacturers reduce their production costs, so their products become cheaper. Imported products (your solar kits) will then be relatively more expensive compared to these subsidized local competitors. The other options: the second is about import quantity restrictions (not directly from subsidies), the third is about taxes (subsidies are not taxes), and the fourth is an extreme (subsidies don't ban imports).

Answer:

A. It will make your products more expensive in India than those of local competitors.