Question 17 Suppose that Home is a small exporter of wheat. The domestic inverse

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Question 17 Suppose that Home is a small exporter of wheat. The domestic inverse supply function of Home producers is given by P-40+4Qs and the domestic inverse demand function of Home consumers is given by P 200-4Q where QS and Q are in tons. Answer questions 11-18 accordingly. For questions 12-18, assume that the world price is as in question 11. 11) If Home exports 20 tons of wheat under free trade, then the world price of one ton of wheat is A) $120 B) $140 C) $150 E)S180 12) If government aims to increase the wheat export by 10 tons, then the government must I. give an export subsidy of $10 per unit. III. give an export subsidy of $20 per unit. A) Only I II. give a production subsidy of $20 per unit. IV. give a tion subsidy of $40 per unit. B) Only IV C) I and II DlI and III E) III and IV 13) If the government decides to increase the wheat export by 10 tons by imposing an export subsidy, the change in consumer surplus and producer surplus are: 14) If the government decides to increase the wheat export by 10 tons by imposing a production subsidy, the change in consumer surplus and producer surplus are: tion subsidy on national welfare are -S and -S respectively if the government aims increase the wheat export by 10 tons A) 200; 400 B) 100, 200 C) 400; 200 D) 100; 100 E) 200; 200 l o he thn eemtsmibsias de he government aims to increase the wheat production by 10 tons, then the government must I. give an export subsidy of $10 per unit. III. give an export subsidy of $20 per unit. A) Only I II. give a production subsidy of $20 per unit. IV. give a production subsidy of $40 per unit. D) II and III E) I IlIl and IV B) Only IV C) I and II and 17) The net effects of the export subsidy and the production subsidy on national welfare are-S respectively if the government aims to increase the wheat production by 10 tons. A) 200; 400 B) 100, 200 C) 400; 200 D) 100; 100 E) 200; 200

Explanation / Answer

Ans 17 The answer of this question is option c i.e -$400 and -$200.

So that net effect of the export subsidey and the production subsidy on national welfare will increase .

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