Figure: Home's Exporting Industry I
The graph shows information about a home exporter.
(Figure: Home's Exporting Industry I) According to the
Graph, an export subsidy of $50 results in a(n) ________ in
Producer surplus by the amount of ______.
A)reduction; $6,500
B)reduction; $5,000
C)increase; $5,500
D)increase; $4,000

Question

Figure: Home's Exporting Industry I
The graph shows information about a home exporter. 
(Figure: Home's Exporting Industry I) According to the
Graph, an export subsidy of $50 results in a(n) ________ in
Producer surplus by the amount of ______.
A)reduction; $6,500 
B)reduction; $5,000 
C)increase; $5,500 
D)increase; $4,000

Quizplus · Accepted Answer

From the graph, we can see that the area representing producer surplus increases by $5,500 with an export subsidy of $50. Therefore, the answer is C, increase by $5,500.