Consider a small exporting country. Compare the cost to the government and the net effect on welfare
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Consider a small exporting country. Compare the cost to the government and the net effect on welfare between an export and production subsidy in the amount of s per unit.
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Home Price PW+S PW I D I a b D₂ 1 D₁ C d S₁ S₂ S Quantity
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With an export subsidy the loss in consumer surplus is equal to the areas ab because the price in th...View the full answer
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