Figure: Home's Exporting Industry I

question 110

Multiple Choice

Figure: Home's Exporting Industry I
The graph shows information about a home exporter.
(Figure: Home's Exporting Industry I) According to the
Graph, the deadweight loss from the $50 export subsidy is:

• A)$500.
• B)$1,000.
• C)$1,500.
• D)$2,500.

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and to generate profit.

Target Costing

A method of price setting that combines market-based pricing with a cost-reduction emphasis; the target cost is the expected selling price less the desired profit.

Marketplace

A platform or environment where buyers and sellers engage in exchange of goods and services. It can be physical or digital.

Target Cost

A pricing strategy in which a company sets a cost for a product and works backwards to achieve that cost through design and manufacturing improvements.