Two years ago, the WTO negotiated a package intended to reduce trade barriers. Developed countries agreed to eliminate farm export subsidies. (I exaggerated what actually happened.) Developed countries are net exporters of farm products. As a group, developed countries comprise a large economy. Use appropriate diagrams and an explanation to show the economic welfare effects (i.e., changes in consumer surplus and producer surplus) of this reduction in farm export subsidies on:(a) developed countries (use one graph to represent them).(b) a small developing country which is a net importer of farm products. The small country practices free trade. (c) a small developing country which is a net exporter of farm products. The small country practices free trade.

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Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 8PA

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Two years ago, the WTO negotiated a package intended to reduce trade barriers. Developed countries agreed to eliminate farm export subsidies. (I exaggerated what actually happened.) Developed countries are net exporters of farm products. As a group, developed countries comprise a large economy. Use appropriate diagrams and an explanation to show the economic welfare effects (i.e., changes in consumer surplus and producer surplus) of this reduction in farm export subsidies on:

(a) developed countries (use one graph to represent them).

(b) a small developing country which is a net importer of farm products. The small country practices free trade.

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