Question 4 (This question has two parts: a and b) You need to read Article 2 ""Our farmers need a better deal": Study shows true cost of trade barriers" to answer questions below. Article 2 specifically mentions: "A NEW AgriFutures Australia-funded study shows that farm subsidies and import barriers abroad lowered Australia's net farm incomes by 15 per cent and reduced its farm exports by 29 per cent." Part (a) Use the concept of supply and demand to explain the paragraph above, especially why farms subsidies abroad lowered Australia's net farm income and reduced its farm exports. [6 marks] Part (b) Use the concept of supply and demand to explain the paragraph above, especially why import barriers abroad lowered Australia's net farm income and reduced its farm exports. [6 marks] Hint for both Parts (a) and (b): you can assume that the world consists only of two countries: Australia and a country called the Rest of the World. The two countries initially trade freely with each other and Australia exports its farm products to the Rest of the World. Then analyse what happens when the Rest of the World provides a production subsidy to its farmers or impose an import tariff on its imports of Australia's farm products.Article 2 (Source: Beef Central, April 20, 2020) "Our farmers need a better deal": Study shows true cost of trade barriers A NEW AgriFutures Australia-funded study shows that farm subsidies and import barriers abroad lowered Australia's net farm incomes by 15 per cent and reduced its farm exports by 29 per cent. The report by Kym Andersor] and Emesto Valenzuela explores the impact of international agriculture subsidies on Australia, a non-subsidising agricultural export country. The report shows that in the four years to 2018 the average nominal rate of assistance to farmers rose for all OECD countries by one-tenth (from 21pc to 23pc), and for the EU28 by slightly more (by one sixth, from 21pc to 25pc), between 2014 and 2016-18., 160 140 120 100 2014 2016-18 Chile Brazil Israel EU 28 Russia Japan Korea Canada China Viet Nam ." Mexico Turkey Australia Ukraine Argentina Iceland Costa Rica Colombia Norway -40 Kazakhstan South Africa Indonesia* Philippines OECD - Total Switzerland New Zealand United States Aggregate agricultural nominal rate of assistance by country 2014 and 2016-18. (% weighted average using value of production without assistance as weights) "Indonesia refers to 2015 in place of 2016-18. Source: OECD (2019). The report shows that import barriers (tariffs and tariff rate quotas) remain the dominant protective policy instrument globally, but domestic support through budgetary transfers has grown in relative importance this century. In 2014, such transfers accounted for a little over one quarter of the cost of these policies to Australian net farm incomes and agricultural exports. All but one-quarter of the impact on Australian agriculture of global farm support measures are due to policies of the EU, Japan, China and Korea. Australia's red meat, wheat and dairy industries are the most adversely affected by farm policies abroad, but rice and cotton exports also are negatively impacted, especially relative to their production size. The aggregate value of farmer assistance is highest in China and the EU, followed by Japan, the United States, Indonesia and Korea. AgriFutures Australia Senior Manager, Business Development, Jen Medway said the findings would equip industries, policy makers and