If goods are exported for less than society's marginal production cost and the marginal benefit to domestic consumers, it is likely that they benefit from?
Correct answer: D. an export subsidy
- A. an import subsidy
- B. a quota
- C. comparative advantage
- D. an export subsidy
Explanation
An export subsidy can make exporting profitable even when the social cost of producing the exported units exceeds their value to domestic consumers, encouraging inefficient overproduction for foreign markets. An import subsidy would instead encourage purchases from abroad.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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