Suppose That the World Price of Sugar Is $100 Per

question 55

Multiple Choice

Suppose that the world price of sugar is $100 per ton.If a
Small country gives its sugar exporters a subsidy of $50 per
Ton, then domestic consumption of sugar will:

• A)fall.
• B)rise.
• C)remain unchanged.
• D)first fall, then rise.

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Definitions:

Marginal Product

is the increase in output resulting from a one-unit increase in the quantity of a particular input, while holding other inputs constant.

Competitive Market

A market structure characterized by a large number of sellers and buyers where no single entity has the power to influence market prices significantly.

Profits

The financial benefit that is realized when revenue generated from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Profit-maximizing

A strategy where a firm sets its production level and pricing to achieve the highest possible profit.