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. stop trading with Brobdingnag.
c. place a tariff on rope imports to offset the subsidy.
d. give a similar subsidy to the rope producers of Lilliput.
Ans: a. continue trading at the subsidized price.
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