The figure below illustrates the impact of an export subsidy as imposed by a large country. No imports are permitted.
What is the net impact on the consumer surplus of the export subsidy provided by the domestic government?
A. The consumer surplus increases by area a.
B. The consumer surplus increases by area (a + b + c).
C. The consumer surplus falls by area (a + b + e + f + g).
D. The consumer surplus falls by area (a + b).
Answer: D
Economics
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