Final answer:
A subsidy on a product will benefit producers more and consumers less when the subsidy is large enough to make the price of the product fall below the cost of production for foreign producers.
Step-by-step explanation:
A subsidy on a product will generate more actual benefit for producers (and less for consumers) when the subsidy is large enough to drive the price of the product below the cost of production faced by foreign producers. In this case, foreign producers will lose money on any product they produce and sell, while domestic producers will benefit from the increased demand and profitability.
For example, let's consider a subsidy on sugar. If the subsidy is significant, the price of sugar can fall below the cost of production for foreign producers. As a result, foreign producers will be unable to compete and will incur losses. Domestic producers, on the other hand, will benefit from the lower cost of production, increased demand, and higher profits.
In summary, a subsidy benefits producers more and consumers less when the subsidy is large enough to make the price of the product fall below the cost of production for foreign producers.