A small country can import a good at a world price of 5 per unit. The domestic supply curve of the good is S = 10 + 10P. The demand curve is D = 600 - 5P. In addition, each unit of production yields a marginal social benefit of 15.

a. Calculate the total effect on welfare of a tariff of 10 per unit levied on imports.

b. Calculate the total effect of a production subsidy of 10 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?

e. There is no marginal social benefit to production. However, for political reasons, the government counts a dollar's worth of gain to producers as being worth $5 of either consumer gain or government revenue. Calculate the effects on the government's objective of a tariff of 10 per unit