Assume that the EU subsidizes the exports of tomatoes to support employment in agriculture. Supply and demand of European producers and consumers are equal top=200+5qs andp=500qd respectively (where prices are in and quantities in tons). Under free trade, the EU is a net exporter of tomatoes and exports 30 tons every day at 475 per ton. Assume that under free trade, the global price is 475 per ton. Now, to support employment in agriculture, the EU starts subsidizing every ton of exports by about 4.2% such that the price European producers get, after the subsidy, rises from 475/ton to 495/ton. Assume the EU is a price taker and cannot affect the world price.

What is the effect on daily EU consumer surplus?

What is the effect on daily EU producer surplus?

How much does this subsidy program cost the EU daily?

What is the daily change in social welfare and why?