When assessing the welfare effect of an export subsidy on a
Small nation, it can be shown that the subsidy:
A)increases national welfare.
B)can be paid for out of increased revenues.
C)hurts producers and helps consumers.
D)is just the same as a tariff on imports: it raises domestic price, increases domestic production, and involves the same
Efficiency and consumption losses.

Question

Quizplus · Accepted Answer

An export subsidy raises domestic prices, similar to a tariff, leading to increased domestic production and efficiency and consumption losses, but it does not increase national welfare.

When Assessing the Welfare Effect of an Export Subsidy on a