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Consider two countries, Home and Foreign. Home is a small exporter of wheat. At the world price of $100 per ton, Home growers export 20
Consider two countries, Home and Foreign. Home is a small exporter of wheat. At the world price of $100 per ton, Home growers export 20 tons. Use the following figure to answer the questions below. Home 120 100 15 20 40 43 Quantity Now suppose the Home government decides to support its domestic producer with an export subsidy of $20 per ton. What is the amount of quantity exported after export subsidy? Calculate the effect of the export subsidy on consumer surplus. Calculate the effect of the export subsidy on producer surplus. Calculate the effect of the export subsidy on government revenue. Calculate the overall net effect of the export subsidy on Home welfare. A. Now consider that the government gives subsidy of $20 per ton for production (instead of export). 1. What is the amount of quantity exported after production subsidy
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