1. Suppose Zambia is small exporter of 5, corn snacks. At the world price of $100 per tonne, Zambian firms export 20 tonnes. Now suppose the Zambian Government decides to support its domestic producers with an export subsidy of $40 per tonne. Use the following figure to answer these questions. (a) What is the quantity exported under free trade and with the export subsidy? (b) Calculate the effect of the export subsidy on consumer surplus, producer surplus, and government revenue. (c) Calculate the overall, or net, effect of the export subsidy on Zambia's welfare. Price in Zambia S 140 100 D 10 20 40 50 Quantity

1. Suppose Zambia is small exporter of 5, corn snacks. At the world price of $100 per tonne, Zambian firms export 20 tonnes. Now suppose the Zambian Government decides to support its domestic producers with an export subsidy of $40 per tonne. Use the following figure to answer these questions. (a) What is the quantity exported under free trade and with the export subsidy? (b) Calculate the effect of the export subsidy on consumer surplus, producer surplus, and government revenue. (c) Calculate the overall, or net, effect of the export subsidy on Zambia's welfare. Price in Zambia S 140 100 D 10 20 40 50 Quantity

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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