2. Calculate the following effects of the $20 per ton production subsidy:(1x 4 = 5 points) the change in producer surplus, the change in consumer surplus, the change in the government budget, and the change in the external social benefit from production the overall impact of tariff on domestic welfare. 3. Is the country better off with a tariff or with the production subsidy? (1 point) Consider that you have become a well-paid consultant on trade policy to the government of a small country Narnia. Narnia can import rice at a world price of $200 per ton. In addition, there is a positive production externality from domestic food production that producers cannot appropriate. Assume that each ton of rice produced yields a marginal external social benefit of $50. Assume that at a price of $200, domestic quantity-demanded equals 200 million tons, and domestic quantity-supplied equals 100 million tons. Assume that for every $10 that price changes, quantity-supplied changes by 3 million tons, and quantity-demanded changed by 2 million tons. To address the market failure in the domestic rice market due to positive production externality, what policy would you suggest to the government of Narnia? Between an import tariff of $20 per ton and a production subsidy of $20 per ton, which policy do you think has the potential to increase domestic welfare (total surplus) more for Narnia? To answer the above questions, you are required to answer the following: 1. Calculate the following effects of the $20 per ton tariff :(1x 5 = 5 points) a. the change in producer surplus, b. the change in consumer surplus, c. the change in the government budget, and d. the change in the external social benefit from production e. the overall impact of tariff on domestic welfare