The figure given below illustrates the impact of an export subsidy as imposed by a large country. No imports are permitted. Price Sa Domestic price with subsidy d: World price World price with subsidy Da Di So Si Quantity a. Compute the change in consumer surplus resulting from the provision of the export subsidy. Show your work. b. Compute the change in producer surplus resulting from the provision of the export subsidy. Show your work. c. Compute the change in government revenue or costs resulting from the provision of the export subsidy. Show your work. d. Compute the net national welfare resulting from the provision of the export subsidy. Show your work.

The figure given below illustrates the impact of an export subsidy as imposed by a large country. No imports are permitted. Price Sa Domestic price with subsidy d: World price World price with subsidy Da Di So Si Quantity a. Compute the change in consumer surplus resulting from the provision of the export subsidy. Show your work. b. Compute the change in producer surplus resulting from the provision of the export subsidy. Show your work. c. Compute the change in government revenue or costs resulting from the provision of the export subsidy. Show your work. d. Compute the net national welfare resulting from the provision of the export subsidy. Show your work.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter17: International Trade

Section: Chapter Questions

Problem 2.5P

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Suppose Home is a small exporter of wheat. At the world price of 100 US dollars per tonne, Home growersexport 20 tons of wheat. Now suppose the Home government decides to support its domestic producers withan specific export subsidy of 40 US dollars per tonne. Use Figure 1 to answer the following question A. ) Calculate the effect of the export subsidy on consumer surplus, producer surplus and government revenue;depict each of these in a graph. What is the overall net effect of the export subsidy on Home welfare?
(a) Explain why consumer and producer surplus can be used to gauge the change in welfare caused by the export subsidy on individuals and firms.
Suppose Home is a small exporter of wheat. At the world price of 100 US dollars per tonne, Home growers export 20 tons of wheat. Now suppose the Home government decides to support its domestic producers with a specific export subsidy of 40 US dollars per tonne. Use Figure 1 to answer the following questions: (a) Explain why consumer and producer surplus can be used to gauge the change in welfare caused by the export subsidy on individuals and firms? (b) What is the quantity exported by Home under free trade and with the export subsidy? (c) Calculate the effect of the export subsidy on consumer surplus, producer surplus, and government revenue; depict each of these in a graph. What is the overall net effect of the export subsidy on Home welfare?
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Suppose Home is a small exporter of wheat. At the world price of 100 US dollars per tonne, Home growers export 20 tons of wheat. Now suppose the Home government decides to support its domestic producers with an specific export subsidy of 40 US dollars per tonne. Use Figure 1 to answer the following questions: I'll attach the graph below A. Explain why consumer and producer surplus can be used to gauge the change in welfare caused by the export subsidy on individuals and firms. B. What is the quantity exported by Home under free trade and with the export subsidy? C. Calculate the effect of the export subsidy on consumer surplus, producer surplus and government revenue; depict each of these in a graph. What is the overall net effect of the export subsidy on Home welfare?
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Graphically explain the negative effects of quotas. How about subsidies? Label and explain results in detail.