Question
Assume that while allowing for free trade with Beefland, Veganstan's policy makers decide to give to all broccoli producers in Veganstan a subsidy of 0.5
Assume that while allowing for free trade with Beefland, Veganstan's policy makers decide to give to all broccoli producers in Veganstan a subsidy of 0.5 $ per kg produced. For Veganstan:
a)graphically show the post subsidy equilibrium price PS and quantity QS;
b)briefly discuss how PS and QS compare to PFT and QFT;
c)discuss the effect of the subsidy on the quantity of broccoli that is being supplied domestically, as well as on the quantity that is being imported from Beefland;
d)discuss the welfare implications of the subsidy relative to free trade.
A graph annotated would be great
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