Lilliput imports rope from Brobdingnag, where ropeproducers are subsidized by the government becauseof their great political clout. The most efficientpolicy from the standpoint of Lilliput is toa. continue trading at the subsidized price.b. place a tariff on rope imports to offset thesubsidy.c. give a similar subsidy to the rope producers ofLilliput.d. stop trading with Brobdingnag.
Lilliput imports rope from Brobdingnag, where ropeproducers are subsidized by the government becauseof their great political clout. The most efficientpolicy from the standpoint of Lilliput is toa. continue trading at the subsidized price.b. place a tariff on rope imports to offset thesubsidy.c. give a similar subsidy to the rope producers ofLilliput.d. stop trading with Brobdingnag.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: Application: International Trade
Section: Chapter Questions
Problem 2PA
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Question
Lilliput imports rope from Brobdingnag, where rope
producers are subsidized by the government because
of their great political clout. The most efficient
policy from the standpoint of Lilliput is to
a. continue trading at the subsidized price.
b. place a tariff on rope imports to offset the
subsidy.
c. give a similar subsidy to the rope producers of
Lilliput.
d. stop trading with Brobdingnag.
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