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A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is Q5=50+5P The

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A small country can import a good at a world price of 10 per unit. The domestic supply curve of the good is Q5=50+5P The demand curve is Qd=40010P In addition, each unit of production yields a marginal social benefit of 10 . a. The welfare gain from a tariff of $5 per unit levied on imports is $ (Round your answer to the nearest penny) b. The welfare gain from a production subsidy of \$5 per unit \$ . (Round your answer to the nearest penny) c. Why does the production subsidy produce a greater gain in welfare than the tariff? A. In addition to acting as a production subsidy, the tariff acts like a consumption tax that reduces the gain in welfare. B. The production subsidy more directly addresses the externality. C. The $5.00 production subsidy increases production more than the $5.00 tariff. D. Both A and B E. All of the above d. The optimal production subsidy is $ (Round your answer to the nearest penny)

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