Refer to Problem 3. Suppose Home is a small exporter of wheat. At the world price of
Question:
a. What is the quantity exported with the production subsidy?
b. Calculate the effect of the production subsidy on consumer surplus, producer surplus, and government revenue.
c. Calculate the overall net effect of the production subsidy on Home welfare. Is the cost of the production subsidy more or less than the cost of the export subsidy for the small country? Explain.
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Related Book For
International Economics
ISBN: 978-1429278447
3rd edition
Authors: Robert C. Feenstra, Alan M. Taylor
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