Suppose a Small Island Nation Imports Sugar for Its Population

question 128

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. With no subsidy, what is producer surplus?

• A)$0 per day
• B)$1,000 per day
• C)$4,000 per day
• D)$8,000 per day

---

Definitions:

Technological Advances

Refers to progress in scientific knowledge that enhances or improves technology, making processes more efficient, products more useful, or services more accessible.

Output Effect

The possibility that when the price of the first of a pair of substitute resources falls, the quantity demanded of both resources will increase.

Present Consumption

The use of goods and services for immediate satisfaction or needs, as opposed to saving for future use.

Loanable Funds

The supply of available capital in the financial markets for borrowing, which can be used for investment purposes by individuals and businesses.