A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is The demand curve is 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 S. (Round your answer to the nearest penny) c. Why does the production subsidy produce a greater gain in welfare than the farift? Q₂ = 50+5P (Round your answer to the nearest penny) Q-400-10P OA. The production subsidy more directly addresses the externality. OB. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare. OC. The $5.00 production subsidy increases production more than the $5.00 tariff. OD. Both A and B OE. All of the above d. The optimal production subsidy is $

A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is The demand curve is 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 S. (Round your answer to the nearest penny) c. Why does the production subsidy produce a greater gain in welfare than the farift? Q₂ = 50+5P (Round your answer to the nearest penny) Q-400-10P OA. The production subsidy more directly addresses the externality. OB. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare. OC. The $5.00 production subsidy increases production more than the $5.00 tariff. OD. Both A and B OE. All of the above d. The optimal production subsidy is $

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is
The demand curve is
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 5 (Round your answer to the nearest penny)
c. Why does the production subsidy produce a greater gain in welfare than the fariff?
O
OA. The production subsidy more directly addresses the externality.
OB. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare.
OC. The $5.00 production subsidy increases production more than the $5.00 tariff.
OD. Both A and B
E. All of the above
Q₂ = 50+5P
d. The optimal production subsidy is $ (Round your answer to the nearest penny)
Q-400-10P

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