Answer Happy

6. Now suppose that instead of importing oranges, Australia is exporting them. To support the orange industry, the government provides an AUD1 subsidy per orange. What will happen to the domestic and world price of oranges after the subsidy assuming that Australia is a large country? a) Domestic price will increase and world price will increase b) Domestic price will increase and world price will decrease c) Domestic price will decrease and world price will increase d) Domestic price will decrease and world price will decrease a 7. Instead of Australia, now Austria (which we assume is a small country) provides the export subsidy. What will happen to the domestic and world price of oranges after the subsidy? a) Domestic price will remain unchanged and world price will decrease b) Domestic price will increase and world price will decrease c) Domestic price will decrease and world price will increase d) Domestic price will increase and world price will remain unchanged