Correct Response: D. One way to ensure that domestic producers sell their products as lower prices than imports would be to provide subsidies such as direct cash payments, low interest loans, reduced insurance rates against weather and pest damage, and disaster aid. If correctly designed, these measures will reduce the cost of production and allow producers to keep prices lower than imports. While these actions run counter to the notion of free trade, all countries tend to subsidize agricultural production to some degree. Creating price supports for both domestic and imported commodities (A) would most likely cause the price of both domestic and imported products to increase. Placing a quota on imports (B) would violate most trade agreements and could lead to a trade war. A joint venture, which is an arrangement between two or more businesses from different countries, will not help domestic producers keep their prices low (C).
