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3 . The Netherlands are a major producer of grains, such as wheat, corn, and rice. In 2 0 0 8 the Dutch government, concerned

3. The Netherlands are a major producer of grains, such as wheat, corn, and rice. In 2008
the Dutch government, concerned that grain exports were driving up food prices for
domestic consumers, imposed a tax on grain exports.
a. Draw the graph that describes the market for grain in an exporting country. Use this
graph as the starting point to answer the following questions.
b. How does an export tax affect domestic grain prices PD?
c. How does it affect the welfare of domestic consumers, the welfare of domestic
producers, and government revenue?
d. What happens to total welfare in the Netherlands, as measured by the sum of
consumer surplus, producer surplus, and tax revenue? What is the size of the
deadweight loss?

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