A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good isQs = 50+ 5PThe demand curve isQd = 400-10PIn addition, each unit of production yields a marginal social benefit of 10.a. The welfare gain from a tariff of $5 per unit levied on imports is $. (Round your answer to the nearest penny)b. The welfare gain from a production subsidy of $5 per unit $. (Round your answer to the nearest penny)c. Why does the production subsidy produce a greater gain in welfare than the tariff?O A. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare.OB. The production subsidy more directly addresses the externality.C. The $5.00 production subsidy increases production more than the $5.00 tariff.D. Both A and BO E. All of the aboved. The optimal production subsidy is $(Round your answer to the nearest penny.)

The demand function represents the relationship between the change in a product and the extent of…

A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is Q = 50+ 5P The demand curve is Qd = 400-10P In addition, each unit of production yields a marginal social benefit of 10. a. The welfare gain from a tariff of $5 per unit levied on imports is $ (Round your answer to the nearest penny) b. The welfare gain from a production subsidy of $5 per unit $ c. Why does the production subsidy produce a greater gain in welfare than the tariff? (Round your answer to the nearest penny) O A. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare. OB. The production subsidy more directly addresses the externality. OC. The $5.00 production subsidy increases production more than the $5.00 tariff. OD. Both A and B O E. All of the above d. The optimal production subsidy is $ (Round your answer to the nearest penny.)

A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is Q = 50+ 5P The demand curve is Qd = 400-10P In addition, each unit of production yields a marginal social benefit of 10. a. The welfare gain from a tariff of $5 per unit levied on imports is $ (Round your answer to the nearest penny) b. The welfare gain from a production subsidy of $5 per unit $ c. Why does the production subsidy produce a greater gain in welfare than the tariff? (Round your answer to the nearest penny) O A. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare. OB. The production subsidy more directly addresses the externality. OC. The $5.00 production subsidy increases production more than the $5.00 tariff. OD. Both A and B O E. All of the above d. The optimal production subsidy is $ (Round your answer to the nearest penny.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Economics Question
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A large or small country imposing a tariff can benefit in terms of social welfare?
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