B2: Export Subsidy Consider a hypothetical market for alpaca wool socks in Peru. Assume the domestic...

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B2: Export Subsidy Consider a hypothetical market for alpaca wool socks in Peru. Assume the domestic supply and domestic demand for sweaters are respectively given by and Qs = 10+5P QD = 100 - 4P where P is the price of a pair of socks. Suppose that Peru is open to free trade and the world price of a pair of socks is equal to $15. The Peruvian government provides a pure export subsidy such that domestic producers receive an additional $5 over and above the world price for every pair of socks they export. Questions 19-23 relate to this information. Question 19 (2 points) Saved What would be the autarky price of alpaca wool socks in Peru? Question 20 (3 points) What is the impact of the export subsidy on the quantity of pairs of socks exported? Question 21 (3 points) What is the impact of the export subsidy households? on the consumer surplus of domestic Question 22 (3 points) What is the impact of the export subsidy on the producer surplus received by domestic suppliers of alpaca wool socks? Question 23 (3 points) What is the overall net impact on welfare due to the export subsidy? B2: Export Subsidy Consider a hypothetical market for alpaca wool socks in Peru. Assume the domestic supply and domestic demand for sweaters are respectively given by and Qs = 10+5P QD = 100 - 4P where P is the price of a pair of socks. Suppose that Peru is open to free trade and the world price of a pair of socks is equal to $15. The Peruvian government provides a pure export subsidy such that domestic producers receive an additional $5 over and above the world price for every pair of socks they export. Questions 19-23 relate to this information. Question 19 (2 points) Saved What would be the autarky price of alpaca wool socks in Peru? Question 20 (3 points) What is the impact of the export subsidy on the quantity of pairs of socks exported? Question 21 (3 points) What is the impact of the export subsidy households? on the consumer surplus of domestic Question 22 (3 points) What is the impact of the export subsidy on the producer surplus received by domestic suppliers of alpaca wool socks? Question 23 (3 points) What is the overall net impact on welfare due to the export subsidy?

Answer rating: 100% (QA)

In autarky a country operates in isolation without engaging in international trade To find the autarky price of alpaca wool socks in Peru we set the domestic supply equal to the domestic demand and so... View the full answer