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Card 10 / 16:
Explain how a subsidy on agricultural goods like sugar adversely affects the income of foreign producers of imported sugar.
A subsidy is like a reduction in cost. This shifts the supply curve down (or to the right), driving the price of sugar down. If the subsidy is large enough, the price of sugar can fall below the cost of production faced by foreign producers, which means they will lose money on any sugar they produce and sell.
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