An export subsidy will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.
A) increase; decrease; increase; have an ambiguous effect on
B) increase; decrease; decrease; decrease
C) increase; decrease; have no effect on; have an ambiguous effect on
D) increase; decrease; have no effect on; decrease
E) increase; increase; decrease; have an ambiguous effect on

Question

Quizplus · Accepted Answer

An export subsidy increases producer surplus because producers can sell more at a higher price supported by the subsidy. It decreases consumer surplus because domestic prices typically increase. It decreases government revenue because the government spends money on the subsidy. Overall, it decreases domestic national welfare due to the inefficiency it introduces, such as overproduction and the cost of funding the subsidy.

An Export Subsidy Will ________ Producer Surplus, ________ Consumer Surplus

An Export Subsidy Will Producer Surplus, Consumer Surplus