K H P P P m P a C P₁ d 72 Dz G D₁ 0 A C D B F The graph above shows the market conditions of specific goods produced and consumed by a small country. Under free trade, the original domestic demand curve for this good is given as D₁ the original domestic supply curve is given as S, and the international price is given as P₁ Suppose the country considers tariffs, import quotas, or production subsidies to achieve some kind of strategic objective. Answer the question below. 4) Suppose that the size of the domestic market of this good is unchanged from the original D₁ level. However, let's say that domestic producers are paid P₁P of production subsidies per unit of product, not tariffs or import quotas. Describe the effect of the production subsidy and give the words in parentheses () in the following text, in order of numbers. "The total amount of subsidies paid by the government is (D), the size of the change in producer surplus is (Ⓡ), the self-weight loss accompanying production is (3), and the size of the change in consumer surplus is (4)." If it is to be displayed as a figure, it must be indicated in the manner of ABC for triangle, ABCD for square, ABCDE for trapezoidal shape, etc. www
K H P P P m P a C P₁ d 72 Dz G D₁ 0 A C D B F The graph above shows the market conditions of specific goods produced and consumed by a small country. Under free trade, the original domestic demand curve for this good is given as D₁ the original domestic supply curve is given as S, and the international price is given as P₁ Suppose the country considers tariffs, import quotas, or production subsidies to achieve some kind of strategic objective. Answer the question below. 4) Suppose that the size of the domestic market of this good is unchanged from the original D₁ level. However, let's say that domestic producers are paid P₁P of production subsidies per unit of product, not tariffs or import quotas. Describe the effect of the production subsidy and give the words in parentheses () in the following text, in order of numbers. "The total amount of subsidies paid by the government is (D), the size of the change in producer surplus is (Ⓡ), the self-weight loss accompanying production is (3), and the size of the change in consumer surplus is (4)." If it is to be displayed as a figure, it must be indicated in the manner of ABC for triangle, ABCD for square, ABCDE for trapezoidal shape, etc. www
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:K
H
P
P
P
m
P
a
C
P₁
d
72
Dz
G
D₁
0
A
C
D
B F
The graph above shows the market conditions of specific goods
produced and consumed by a small country. Under free trade, the
original domestic demand curve for this good is given as D₁ the original
domestic supply curve is given as S, and the international price is given
as P₁ Suppose the country considers tariffs, import quotas, or
production subsidies to achieve some kind of strategic objective. Answer
the question below.
4) Suppose that the size of the domestic market of this good is unchanged from
the original D₁ level. However, let's say that domestic producers are paid P₁P
of production subsidies per unit of product, not tariffs or import quotas.
Describe the effect of the production subsidy and give the words in parentheses
() in the following text, in order of numbers. "The total amount of subsidies
paid by the government is (D), the size of the change in producer surplus is (Ⓡ),
the self-weight loss accompanying production is (3), and the size of the change
in consumer surplus is (4)." If it is to be displayed as a figure, it must be
indicated in the manner of ABC for triangle, ABCD for square, ABCDE
for trapezoidal shape, etc.
www
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