Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below.If the government provides a subsidy of $500 per ton, then producer surplus will be ________ per day.

When production of a good results in an external cost, the unregulated competitive market equilibrium is inefficient because ________

A) MSC = MC B) MSC = MB C) MSC > MB D) MSC < MB E) MSC is undefined

Refer to the scenario above. Which of the following will happen if the equilibrium price charged by the firm in the short run is $130?

A) The firm will earn positive economic profits and continue production. B) The firm will incur a loss but continue production. C) New firms will enter the industry in the long run. D) All firms will incur losses in the long run.