Suppose the Government Grants a Subsidy to Its Export Firms

question 12

Multiple Choice

Suppose the government grants a subsidy to its export firms that permits them to charge lower prices on goods sold abroad.The export revenue of these firms would rise if the foreign demand is:

• A) Elastic in response to the price reduction
• B) Inelastic in response to the price reduction
• C) Unit elastic in response to the price reduction
• D) None of the above

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Definitions:

Gravity Variation

Differences in gravitational force measured across the Earth's surface, caused by variations in the density of underlying rocks and materials.

Contour Map

A map marked with lines that represent equal elevation points, used to show the shape and elevation of land surfaces.

Water Table

The upper level of an underground surface in which the soil or rocks are permanently saturated with water, marking the boundary between groundwater and surface water.

Elevations

Refers to the heights of landforms relative to sea level or ground level.