(Scenario: Freedonian Exports) in the Small Country of Freedonia, the Domestic

question 79

Multiple Choice

(Scenario: Freedonian Exports) In the small country of Freedonia, the domestic demand for widgets is represented by P = 100 - 3Q; the domestic supply of widgets is represented by P = 1Q. Is the subsidy paid to Freedonia's widget exporters considered part of the deadweight losses of the subsidy?

• A) Yes: they are a payment to Freedonian exporters.
• B) Yes: they are paid by Freedonian exporters that supply the domestic market.
• C) No; they are a redistribution of income within the Freedonian economy.
• D) No; consumers of Freedonian widget exports pay the subsidies.

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Definitions:

Unconscionable Transactions Relief Act

Legislation providing remedies against agreements made under unfair conditions.

Protection

Measures or actions taken to guard against harm, damage, loss, or any unwanted outcome, often referring to safeguarding people, property, or interests.

Promissory Note

A written promise to pay a specified sum of money to another party under agreed terms at a specified time.

Bill of Exchange

A written, unconditional order by one party, directing another party to pay a specific sum of money to a third party on demand or at a set time.