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Q. |
Suppose the government grants a subsidy to its export firms that permits them to charge lower prices on goods sold abroad. The export revenue of these firms would rise if the foreign demand is: |
A. | Elastic in response to the price reduction |
B. | Inelastic in response to the price reduction |
C. | Unit elastic in response to the price reduction |
D. | None of the above |
Answer» A. Elastic in response to the price reduction |
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