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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. 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 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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