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 relative to before the subsidy, total economic surplus will ________ by ________ per day.
A. increase; $1,000
B. decrease; $6,500
C. decrease; $1,000
D. increase; $6,500
Answer: C
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