- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 6. International Trade
- Subject 2. International Trade Restrictions and Agreements
CFA Practice Question
Which trade policy will increase producer surplus?
II. Import quota
III. Export subsidy
IV. VER
I. Tariff
II. Import quota
III. Export subsidy
IV. VER
Correct Answer: All of them
User Contributed Comments 3
| User | Comment |
|---|---|
| something | Can someone explain how III. Export subsidy and VER work out in this case, same as question as previous question on consumer surplus. |
| syazwan21 | Well Export subsidy will shift the supply curve to the left, effectively decreasing consumer surplus and increasing producer surplus at the expense of the government. VER is similar to quota but the tab is picked up by the exporting government instead of the importing one. This also shifts supply curve to the left. |
| chesschh | export subsidy encourages exports of goods thus increase producer surplus. voluntary export restraint is telling that other countries will restrain from exporting which increases domestic demand |