a. Calculate the total effect on welfare of a tariff of 5 per unit levied on imports.

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b. Calculate the total effect of a production subsidy of 5 per unit.

c. Why does the production subsidy produce a greater gain in welfare than the tariff?

d. What would the optimal production subsidy be?

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International Economics Theory & Policy

ISBN: 9780138002121

8th Edition

Authors: Paul R Krugman, Maurice Obstfeld

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Question Posted: Oct 02, 2024 06:01 AM

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a. Calculate the total effect on welfare of a tariff of 5 per unit levied on imports.

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International Economics Theory & Policy

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