Suppose a Small Island Nation Imports Sugar for Its Population

question 98

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, total economic surplus will ______ by ______ per day.

• A)increase; $6,500
• B)decrease; $6,500
• C)increase; $1,000
• D)decrease; $1,000

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