In 1980 the U.S imposed export quotas on grain sold to the Soviet Union in response to its armed invasion of Afghanistan if other nations do not increase grain exports to the soviets all the following would likely occur except?
Correct answer: C. Grains prices would rise in the united States
- A. Grain prices would rise in the Soviet union
- B. Consumer surplus would decrease for the soviets
- C. Grains prices would rise in the united States
- D. Export revenues would decrease for U.S producers
Explanation
Restricting U.S. grain exports reduces demand in the U.S. market, so U.S. grain prices would tend to fall rather than rise. Soviet prices would rise, Soviet consumer surplus would fall, and U.S. producers would generally lose export revenue.
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