question one hw, Macroeconomics

Assignment Help:
A small country can import a good at a world price of 10 per unit. The domestic
supply curve of the good is
S = 20 + 10P
The demand curve is
D = 400 – 5P
In addition, each unit of production yields a marginal social benefit of 10.
a. Calculate the total effect on welfare of a tariff of 5 per unit levied on
imports.
S= 20+10(10) = 120
D= 400-5(10) =350
M=S-D 120-350= 230
b. Calculate the total effect of a production subsidy of 5 per unit.

c. Why does the production subsidy produce a greater gain in welfare than
the tariff?
d. What would the optimal production subsidy be?

Related Discussions:- question one hw

Kind of organization, Informal groups exist in almost every kind of organiz...

Informal groups exist in almost every kind of organization. Answer the following questions and provide examples to support your position: • What types of informal groups do you

Keynesian fiscal policy, Assume the economy has a GDP of $11,500 billion.  ...

Assume the economy has a GDP of $11,500 billion.  The unemployment rate is at 7.3% and has been slowly rising for the last 6 months.  Inflation was at 2.3% one year ago but has sin

#.., what are the purposes of taxation

what are the purposes of taxation

Write the mass balance equation, Environmental engineers and scientists are...

Environmental engineers and scientists are becoming concerned about pharmaceuticals in the environment. An antibiotic is discharged into a small lake at an influent concentration o

Understand external environment, Why is it important for an organization to...

Why is it important for an organization to study and understand its external environment?

Negative outflow to the u.s. balance, A negative outflow to the U.S. balanc...

A negative outflow to the U.S. balance of payments is generated by the purchase of United States assets (such as United States Treasury bonds) by foreign investors and the sale of

Overnight interest rate of central banks, Overnight interest rate of Centra...

Overnight interest rate of Central banks When the central bank buys government securities, it purchases from many individuals, companies and institutions. Deposits and reserves

Define the prices and price level, Q. Define the Prices and price level? ...

Q. Define the Prices and price level? Prices are of great significance in macroeconomics as undeniably they are in microeconomics. Though in microeconomics we are more interest

Determine the economic functions of money, Determine the Economic functions...

Determine the Economic functions of money There are three functions of economics of money - A medium of exchange. - A unit of account - Store of value.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd