Suppose a Small Island Nation Imports Sugar for Its Population

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, the equilibrium price of sugar will be ______ per ton, and the equilibrium quantity will be ______ tons per day.

A) $1000; 12
B) $1000; 8
C) $1500; 12
D) $1500; 8