Ambrosia, a small country in the Mediterranean region, has an agriculture-based economy. In recent years, a decline in global trade barriers has led to a massive increase in agricultural production in Ambrosia. The government of Ambrosia has claimed that this expansion has increased the country’s GDP and also improved the overall welfare of its people by increasing employment opportunities. However, critics of the government have claimed that this expansion has actually made the people of Ambrosia worse off.
Which of the following, if true, would support the critics’ argument?
a. The expansion was made possible by an expansion of pesticide use that has damaged the natural environment.
b. The prices of inputs used in the production of agricultural products have declined
c. The agricultural market in Ambrosia faces limited competition from the producers in other countries.
d. Domestic demand for agricultural products is relatively low in comparison to worldwide demand.
e. Increased agricultural production accounted for most of the increase in GDP.