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 in the accompanying figure. If the government provides a subsidy of $500 per ton, then the cost of subsidy, which must be borne by taxpayers, will be ______ per day. A.) $500 B.) $2,000 C.) $5,000 D.) $6,000
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 in the accompanying figure. If the government provides a subsidy of $500 per ton, then the cost of subsidy, which must be borne by taxpayers, will be ______ per day. A.) $500 B.) $2,000 C.) $5,000 D.) $6,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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 in the accompanying figure.
If the government provides a subsidy of $500 per ton, then the cost of subsidy, which must be borne by taxpayers, will be ______ per day.
A.) $500
B.) $2,000
C.) $5,000
D.) $6,000
Transcribed Image Text:Price ($/ton)
2500
2000
1500
1000
500
0
4 8 12
Quantity (tons/day)
16
S = World price
Domestic price
with subsidy
20
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