When Assessing the Welfare Effect of an Export Subsidy on a

question 15

Multiple Choice

When assessing the welfare effect of an export subsidy on a
Small nation, it can be shown that the subsidy:

• A)increases national welfare.
• B)can be paid for out of increased revenues.
• C)hurts producers and helps consumers.
• D)is just the same as a tariff on imports: it raises domestic price, increases domestic production, and involves the same
• Efficiency and consumption losses.

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Definitions:

Planned Selling Price Sep## Actual Units Sold

This represents the comparison between the pre-established price at which goods were intended to be sold and the actual number of units sold.

Significant Variances

Major discrepancies between planned and actual figures in budgets, costing, or any financial metric.

Favorable Cost Variance

A situation where the actual cost of a product or service is less than its budgeted or standard cost.

Direct Materials Price Variance

The difference between the actual cost of direct materials used and the budgeted cost, based on the standard prices.