The Following Graph Shows the Domestic Supply and Demand Curves

question 74

Multiple Choice

The following graph shows the domestic supply and demand curves for a good. S1 and S2 represent the domestic industry supply before and after the provision of a subsidy by the government respectively, while D represents the domestic demand for the product. Prior to the subsidy, the country was importing 300 units of the good. Refer to the graph to answer the question. Which of the following is true once the subsidy is implemented?

• A) The domestic supply curve shifts and the quantity supplied increases to 300 units.
• B) The world price changes to £8 per unit.
• C) The domestic demand remains unchanged at 400 units.
• D) The quantity of imports increases.

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Definitions:

Friedman Two-way ANOVA

A nonparametric statistical test used to detect differences in treatments across multiple test attempts.

Wilcoxon Rank Test

A non-parametric test used to compare two paired groups to determine whether their population mean ranks differ.

Independent Samples

Groups of data in which the members of one group are not related or matched to the members of the other group(s).

Nonparametric Tests

Statistical tests used for data that does not necessarily meet the assumptions required for parametric tests, often used when data is not normally distributed.