Figure 6.2 illustrates the calculator market for Mexico, assumed to be a small nation that is unable to 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.The South Korean subsidy ______________ Mexican manufacturers, since their producer surplus ______________ by $______________.

Question

Figure 6.2 illustrates the calculator market for Mexico, assumed to be a small nation that is unable to 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.The South Korean subsidy ______________ Mexican manufacturers, since their producer surplus ______________ by $______________.

Quizplus · Accepted Answer

The export subsidy in South Korea will lead to an increase in supply and a decrease in the price of the product in the international market. This will hurt Mexican manufacturers who will face a decrease in their producer surplus. From the figure, we can see that the producer surplus of Mexican manufacturers falls by $100. Therefore, the correct choice is D) hurts, falls, $100.

Figure 62 Illustrates the Calculator Market for Mexico, Assumed to Be