(Figure: Home's Exporting Industry II) the Graph Shows the Effect

question 35

Multiple Choice

(Figure: Home's Exporting Industry II) The graph shows the effect of a subsidy on a large country. D describes home demand and S describes home supply. According to the graph, what is the revenue cost for the government from the $100 export subsidy?

• A) $1,250
• B) $12,500
• C) $150
• D) $1,500

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Definitions:

Degree of Operating Leverage

A financial indicator that evaluates how changes in sales volume impact a company's operating earnings.

Break-even

The juncture where overall expenses match total income, indicating neither profit nor loss is present.

Unit Sales

The total quantity of an item or product sold.

Contribution Margin Ratio

A ratio that measures the proportion of each sales dollar remaining after variable costs have been deducted.