Show that this subsidy induces the same domestic output

Reference no: EM131310405

The market for rice in an East Asian country has demand and supply given by QD 28 4P and QS 12 6P, where quantities denote millions of bushels per day.a. If the domestic market is perfectly competitive, find the equilibrium price and quantity of rice. Compute the triangular areas of consumer surplus and producer surplus.b. Now suppose that there are no trade barriers and the world price of rice is $3. Confirm that the country will import rice. Find QD, QS, and the level of imports, QD QS. Show that the country is better off than in part (a), by again computing consumer surplus and producer surplus.c. The government authority believes strongly in free trade but feels political pressure to help domestic rice growers. Accordingly, it decides to provide a $1 per bushel subsidy to domestic growers. Show that this subsidy induces the same domestic output as in part (a). Including the cost of the subsidy, is the country better off now than in part (b)? Explain.

Reference no: EM131310405

Questions Cloud

Social networks and what are their advantages : What are social networks and what are their advantages? Are there any ethical issues with companies that recruit IT workers from other countries?

Prepare a narrative that describe site to prospective client : Create a narrative that describes the site to your prospective client. Create a storyboard diagram depicting the layout of your Website. Create a Cascading Style Sheet (.css) for all pages.

What kind of firewall application : SouthWall is a firewall application. Examine the SouthWall fire application and one additional firewall application. List and discuss three advantages and three disadvantages of the SouthWall firewall application and the one additional firewall ap..

What is his opportunity cost per year to buy the house : If he pays cash for the house, the annual insurance is $3,000 and the taxes are $4,000. What is his opportunity cost per year to buy the house

Show that this subsidy induces the same domestic output : Show that this subsidy induces the same domestic output as in part (a). Including the cost of the subsidy, is the country better off now than in part (b)? Explain.

What clarification do you need regarding the posting : Choose a developed country and discuss how its model of health care (e.g., national health insurance, national health system, or socialized health insurance) differs from that of the United States.Discuss some of the strengthens and weaknesses of ..

Determine five pieces of data to encrypt and decrypt : Determine at least five pieces of data to encrypt and decrypt. Determine a key (or a set of keys) that is different from the samples provided in CrypTool.

Encryption in organizations : Suppose an executive-level manager asked you to explain the importance of encryption. Detail the key points that you would use to justify the importance of using encryption during the overall security posture analysis of the executive-level manage..

Project evaluation and microsoft solutions framework : Analyze the relationship between a Feasibility Study and a Cost-Benefit Analysis. Investigate the main reasons why both of these evaluations must tie to the organizational strategic plan. Suggest two (2) issues that an organization may face if the..

User Account

All Pages