The Presence of an Export Subsidy (Assuming That Foreign Demand

question 4

Multiple Choice

The presence of an export subsidy (assuming that foreign demand is not perfectly-Inelastic)

• A) will increase the price of the export good in the home market and decrease the well-Being of home consumers.
• B) will decrease the price of the export good in the home market and increase the well-Being of home consumers.
• C) will lead to a net gain in welfare in the home country since producer surplus is Enhanced.
• D) can lead to a higher import price in the importing country in the large-country case.

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