Question: Consider a large country with export subsidies in place for agriculture. Suppose the country changes its policy and decides to cut its subsidies in half.

Consider a large country with export subsidies in place for agriculture. Suppose the country changes its policy and decides to cut its subsidies in half.
a. Are there gains or losses to the large country, or is it ambiguous? What is the impact on domestic prices for agriculture and on the world price?

b. Suppose a small food-importing country abroad responds to the lowered subsidies by lowering its tariffs on agriculture by the same amount. Are there gains or losses to the small country, or is it ambiguous? Explain.
c. Suppose a large food-importing country abroad reciprocates by lowering its tariffs on agricultural goods by the same amount. Are there gains or losses to this large country, or is it ambiguous? Explain.

(a) Home Market (b) World Market Home price World price Home export supply, X Ps Foreign import demand, M" D2 0 2 Quantity Exports

Step by Step Solution

★★★★★

3.52 Rating (169 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a There are unambiguous gains to the large exporting country Not only do deadweight losses decrease ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

745-B-E-I-E (968).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

A new chemist moved into an industrial lab where work was being done on oxygenated gasoline additives. Among the additives that had been tested, she found an old bottle containing a clear, pleasant...

Consider a large country applying a tariff t to imports of a good like that represented in Figure 8-9. a. How does the export supply curve in panel (b) compare with that in the smallcountry case?...

Consider a large country applying a tariff t to imports of a good like that represented in Figure 8-9. How does the size of the terms-of-trade gain compare with the size of the deadweight loss when...

Refer to Problem 3. Rather than a small exporter of wheat, suppose that Home is a large country. Continue to assume that the free-trade world price is $100 per ton and that the Home government...

Describe the impact of each of the following goals from the Hong Kong WTO meeting on (i) domestic prices and welfare of the country taking the action and (ii) world prices and welfare for the partner...

Consider a large country with export subsidies in place for agriculture. Suppose the country changes its policy and decides to cut its subsidies in half. a. Are there gains or losses to the large...

2. Consider a large country with export subsidies in place for agriculture. Suppose the country changes its policy and decides to cut its subsidies in half. a. Are there gains or losses to the large...

For the project, Students should read Chapter 19 and then write a short Chapter Summary, T he world is a giant shopping mall, and Americans are big spenders. For example, the U.S. population is less...

If free trade was allowed in the sugar industry, explain the effects on the underdeveloped countries that could now export sugar.(Hint...use words like GDP, productivity, standard of living,...

Whyare sugar refineries in the U.S. not making efforts to refine sugar more efficiently and environmentally friendly? December 4, 2001 No. 13 America's Bittersweet Sugar Policy by Mark A. Groombridge...

At December 31, 2014, Indigo Girls Company has outstanding noncancelable purchase commitments for 36,000 gallons, at $3.00 per gallon, of raw material to be used in its manufacturing process. The...

Following are five series of costs A through E measured at various volume levels. Examine each series and identify which is fixed, variable, mixed, step-wise, or curvilinear. Volume (Units) Series...

1394. Using a forked rod, a smooth cylinder P, having a mass of 0.4 kg, is forced to move along the vertical slotted path r = (0.6u) m, where u is in radians. If the cylinder has a constant speed of...

1. Tiana Morales is the director of the customer call center for Pierce Software. For the past three months, she has been keeping track of the support calls the center receives, and asks for your...

You need to calculate the Average Days on Lot based on MSRP and/or Types using the Inventory data. n. Enter functions into the Average Days on Lot chart area that calculate the following: Insert a...

The continuous function f f is defined for 4x4 4 x 4 . The graph of f f , shown above, consists of two line segments and portions of three parabolas. The graph has horizontal tangents at x=12,...

Worldwide United Corporation (WUC), a U.S. taxpayer, manufactures and sells products through a network of foreign branches and wholly- owned foreign subsidiaries. Relevant information for these...

Patricia and Greg Williams, both aged 67, have recently retired. In considering their retirement plans, Williams have decided to do an audit on their current financial situation. On 1 July 2019, they...

Define a random error term with an example. Discuss the reasons to include the random error term in a model.

Canada and Australia are (mainly) English-speaking countries with populations that are not too different in size (Canadas is 60 percent larger). But Canadian trade is twice as large, relative to GDP,...

Mexico and Brazil have very different trading patterns. While Mexico trades mainly with the United States, Brazil trades about equally with the United States and with the European Union. In addition,...

Equation says that trade between any two countries is proportional to the product of their GDPs. Does this mean that if the GDP of every country in the world doubled, world trade would quadruple? Tij...

For each of the following independent cases (14), compute the missing values Case 1 Case 2 Case 3 Case 4 Beginning Raw Materials 6,800 22,000 92,000 Raw materials Purchases 53,000 11,150 51,640...

write a method will return the original string but will insert the character / / at the beginning of String b parameter, the middle of String b parameter / / and then at the end of String b parameter...

you have already solved this question but i just want to now how did you get Yield to maturity = YTM = 3.1% Question Assume that we know the following A bond will make a risk-free payment of 1000 SEK...