The figure below shows the national market for mopeds in a small country. Dd and Sd are the domestic demand and supply curves of mopeds respectively.
If there is initially free trade, and then a $50 per unit subsidy is given to the domestic producers of mopeds, domestic production will increase by
A. 100,000 units.
B. 1,200,000 units.
C. 700,000 units.
D. 600,000 units.
Answer: A
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