HELP PLS (1 Viewer)

[peep]

Hey all,

I have my 1st economics exam coming up, and I desperately need help with this question


Thanks in advance everyone!!

 

[peep]

The answers say D..

 

[its_ace21]

The answers say D..

the answer is wrong how could @mmmmmmmmaaaaaaa be wrong

 

[Jane Mao]

The answer should be C. The tarrif of $2 is a prohibitive tariff so no imports at all. So we need to shift supply curve right until it meets demand at $3. Therefore subsidy amount is the vertical distance between the two line aka 7-3=$4 and it's paying for an amount of 40 000 (since 60000-20000 of original supply ) so total subsidy cost = $160000