Question 4 Suppose Home is a small exporter of wheat. At the world price of 100 US dollars per tonne, Home growers export 20 tons of wheat. Now suppose the Home government decides to support its domestic producers with an specific export subsidy of 40 US dollars per tonne. Use Figure 1 to answer the following questions: Figure 1: Supply and Demand for Wheat at Home Home price 140 100 X 20 40 10 50 Supply Demand Quantity (a) Explain why consumer and producer surplus can be used to gauge the change in welfare caused by the export subsidy on individuals and firms. (b) What is the quantity exported by Home under free trade and with the export subsidy? (c) Calculate the effect of the export subsidy on consumer surplus, producer surplus and government revenue; depict each of these in a graph. What is the overall net effect of the export subsidy on Home welfare?

Question 4 Suppose Home is a small exporter of wheat. At the world price of 100 US dollars per tonne, Home growers export 20 tons of wheat. Now suppose the Home government decides to support its domestic producers with an specific export subsidy of 40 US dollars per tonne. Use Figure 1 to answer the following questions: Figure 1: Supply and Demand for Wheat at Home Home price 140 100 X 20 40 10 50 Supply Demand Quantity (a) Explain why consumer and producer surplus can be used to gauge the change in welfare caused by the export subsidy on individuals and firms. (b) What is the quantity exported by Home under free trade and with the export subsidy? (c) Calculate the effect of the export subsidy on consumer surplus, producer surplus and government revenue; depict each of these in a graph. What is the overall net effect of the export subsidy on Home welfare?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

4. Assume that supply for replacement mobile phone batteries in the Australian domestic market is given by the inverse-supply expression P = 9+0.000010s, while inverse demand is P = 19 -0.00001QD. The world price for batteries is $10. (a) Find the equilibrium price and quantity in the market for replacement mo- bile phone batteries if Australia does not engage in any international trade. Compute the consumer surplus, the producer surplus, and the total surplus in the market. (b) Now assume that Australia trades on the world market for batteries, exporting or importing batteries depending on the relation between the world and domestic prices. Find the price at which batteries will be sold in Australia, the quantity purchased, the quantity produced, and the quantity of imports or exports. Compute the consumer surplus, the producer surplus, and the total surplus in the market, as well as the gains from trade relative to part (a). (c) The Australian government imposes a $2 tariff on the…
Using demand and supply, illustrate the effects of a quota imposed by the Canadian government on US wheat . Show the US wheat market and the Canadian wheat market.
What are the effects of farm subsidies such as those of the United States and the European Union on ( a) domestic agricultural prices, (b) world agricultural prices, and (c ) the international allocation of agricultural resources?
Lesson 12 Question 7
Domestic Demand Function: p= 80-4Q Domestic Supply Function: p= 20+2.5Q There was an international trade world price of $30 and now it dropped to $20 how will that decline the producer surplus?
3
Suppose a domestic market in a country is perfectly competitive. The domestic market is small and cannot influence the international price. Assume the country exports to the international market. Which of the following is correct about the effect of a tax per unit purchased in the country? a. The domestic producers supply more to the domestic market b. Increases export quantity c. Increases total quantity supplied d. Decreases total quantity supplied e.None of the above
During the first 6 months of 2008, the United States imported from Africa, Asia, and Latin America more than 1.6 billion pounds of coffee and did not export any coffee. How is the gain from imports distributed between consumers and domestic producers? A. U.S. producer surplus shrinks. B. U.S. consumer surplus increases. C. Total U.S. surplus increases. D. All the above answers are correct.
4
Consider a large country with the following inverse demand and supply functions of golf clubs: P = 100 - Q. P = 20 + Q. The world price of golf clubs is 80. This country's government decided to support domestic golf club producers and introduced an export subsidy of 20, which led to a decrease in the world price to 70 per club. The world's deadweight loss, associated with this subsidy is then equal to
Suppose the world price of oil is $15 per barrel. At that price, the United States imports 400 million barrels daily and consumes 600 million barrels daily. The government then imposes a $5 per barrel tax on oil imports. For every dollar increase in oil prices, domestic consumption decreases by 20 million barrels per day, while domestic production increases by 40 million barrels per day. 3. What will be the cost of inefficient production, loss in consumer surplus, and deadweight loss? Use a diagram to help answer the question.
I got wrong answer. Please help!!