Figure 6.2 illustrates the calculator market for Mexico,assumed to be a small nation that is unable influence the South Korean (world) price.Assume the South Korean price to be $60 per calculator.
Figure 6.2.Effects of an Export Subsidy

-Consider Figure 6.2.As a result of the South Korean subsidy,Mexicans find their consumer surplus:

Question

Figure 6.2 illustrates the calculator market for Mexico,assumed to be a small nation that is unable influence the South Korean (world) price.Assume the South Korean price to be $60 per calculator.
Figure 6.2.Effects of an Export Subsidy
 
-Consider Figure 6.2.As a result of the South Korean subsidy,Mexicans find their consumer surplus:

Quizplus · Accepted Answer

With the South Korean subsidy, the world price decreases to $40 per calculator (as shown in the figure). Mexican consumers initially faced a domestic price of $80 per calculator (equivalent to the world price plus the transportation cost). With the subsidy-induced lower price, Mexican consumers gain from the increase in consumer surplus. The area of the shaded triangle between the original demand and supply curves and the new demand curve shows the total gain in consumer surplus, which is equal to $220. Therefore, the correct answer is B.

Figure 62 Illustrates the Calculator Market for Mexico,assumed to Be a a Small