Question 3 (Export subsidy in a small country) Suppose Ethiopia's demand and supply curves for coffee are = D* 90 20P; S* = 30 + 20P a) Find the autarky equilibrium price of coffee and the quantity bought and sold in Ethiopia. b) Now suppose the world price of coffee is 2 and Ethiopia is a small country which cannot affect the world price of coffee. If Ethiopia opens up to trade and practices free trade in coffee what is going to be the price of coffee in Ethiopia? How much coffee will Ethiopia export? c) Calculate the impact of opening to trade on the welfare of Ethiopia. Show your results diagrammatically. d) Now suppose Ethiopia decides to subsidize the export of coffee. In particular, it gives an export subsidy of 0.5. What happens to the domestic price of coffee in Ethiopia? e) With the export subsidy of 0.5, what happens to the production, consumption and export of coffee in Ethiopia? f) Calculate the welfare implications of an export subsidy of 0.5 compared to the free trade situation.

Q: What is the purpose of graphic analysis?

A: Graphical analysis refers to the data analysis done using graphical techniques in order to determine…

Q: (Trade Restrictions) Suppose that the world price for steel is below the U.S. domestic price, but…

A: When a country wants to restrict its imports of foreign goods it can use two devices: Tariffs…

Q: In a company, who gets to determine when and how data should be used?

A: Data refers to individual facts, figures, or bits of information that are often quantitative. A…

Q: The parts where it is written on paper the paragraphs below. Can you please type them as I do not…

A: Budget line shows the relationship between the goods , their prices and the income of consumer.  The…

Q: Please answer full questions including fill in the blanks.

A: When an initial injection into a circular flow results in a larger ultimate rise in real national…

Q: Answer the questions a through f

A: As per company policy we are only supposed to answer one question up-to 3 subsets in one session, so…

Q: Please write more clearly.

A: Production function shows the relationship between the inputs used and output produced. The marginal…

Q: Tutorial

A: Hi, thank you for the question. As per our Honor code, we are allowed to attempt only first…

Q: Select one topic from the list below related to money and banking for the course. Once you have…

A: Electronic transactions and banking refer to the use of digital platforms to conduct financial…

Q: What are some common examples of expenses?

A: To generate revenue, the business organizes many activities. The cost of doing these activities are…

Q: HOW TO DRAW A TABLE FORM

A: There are 4 possible ways in which the other player can act :- 1) always choose ‘C’ 2) He will…

Q: Select one topic from the list below related to money and banking for the course. Once you have…

A: The global market and banking connection refers to the interdependence between international…

Q: c) What is the cost of the consumer's original 2018 bundle at the new 2019 prices? How much…

A: Now, the price of food F1= $100  the price of housing increased H1 = $200. the cost of the…

Q: What important informations are required in evaluations?

A: Evaluation can be understood as a systematic and objective assessment of an ongoing or completed…

Q: Select one topic from the list below related to money and banking for the course. Once you have…

A: The 2007-2008 mortgage crisis, also known as the subprime mortgage crisis, was a nationwide banking…

Q: hello is there a way to get help on the chart please

A: Introduction We have given market demand and supply equation.  Market demand: P = 10 - Q Market…