Suppose a Small Island Nation Imports Sugar for Its Population

question 10

Multiple Choice

Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below. If the government provides a subsidy of $500 per ton, then relative to before the subsidy, consumer surplus will ________ by ________ per day.

• A)decrease; $500
• B)decrease; $1,000
• C)increase; $1,000
• D)increase; $5,000

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Definitions:

Total Cost Transferred

The total amount of costs moved from one stage of production to the next, or from one department to another.

Processing Department

A division within a factory where a specific stage of production is completed, contributing to the transformation of raw materials into finished products.

Cost System

A method employed by a business to track, record, and analyze costs, aiding in financial planning and cost control.

Total Cost Transferred

The aggregate cost of goods or services that is moved from one process or department to another within a company.