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3. A small country can import a good at a world price of 5 per unit. The domestic supply of the good is S=10+10P, and the demand curve is D=600-10P. In addition, each unit of production yield a marginal social benefit of 10. (a) Using a graph, briefly explain and calculate (i) the total effect on the welfare of a tariff of 10 per unit levied on imports. (ii) the total effect on the welfare of a production subsidy of 10 per unit. 17 (b) Why does the production subsidy produce a greater gain in the welfare of the tariff? (c) What would the optimal production subsidy be?

3. A small country can import a good at a world price of 5 per unit. The domestic supply of the good is S=10+10P, and the demand curve is D=600-10P. In addition, each unit of production yield a marginal social benefit of 10. (a) Using a graph, briefly explain and calculate (i) the total effect on the welfare of a tariff of 10 per unit levied on imports. (ii) the total effect on the welfare of a production subsidy of 10 per unit. 17 (b) Why does the production subsidy produce a greater gain in the welfare of the tariff? (c) What would the optimal production subsidy be?

Chemistry
Chemistry
10th Edition
ISBN:9781305957404
Author:Steven S. Zumdahl, Susan A. Zumdahl, Donald J. DeCoste
Publisher:Steven S. Zumdahl, Susan A. Zumdahl, Donald J. DeCoste
Chapter1: Chemical Foundations
Section: Chapter Questions
Problem 1RQ: Define and explain the differences between the following terms. a. law and theory b. theory and...
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3. A small country can import a good at a world price of 5 per unit. The domestic supply of the good is S=10+10P, and the demand curve is D=600-10P. In addition, each unit of production yield a marginal social benefit of 10. (a) Using a graph, briefly explain and calculate (i) the total effect on the welfare of a tariff of 10 per unit levied on imports. (ii) the total effect on the welfare of a production subsidy of 10 per unit. 17 (b) Why does the production subsidy produce a greater gain in the welfare of the tariff? (c) What would the optimal production subsidy be?
Transcribed Image Text:3. A small country can import a good at a world price of 5 per unit. The domestic supply of the good is S=10+10P, and the demand curve is D=600-10P. In addition, each unit of production yield a marginal social benefit of 10. (a) Using a graph, briefly explain and calculate (i) the total effect on the welfare of a tariff of 10 per unit levied on imports. (ii) the total effect on the welfare of a production subsidy of 10 per unit. 17 (b) Why does the production subsidy produce a greater gain in the welfare of the tariff? (c) What would the optimal production subsidy be?
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