which is small, exports good X. Its excess supply curve is given

(30 points) Country H, which is small, exports
good X. Its excess supply curve is
given by P=100+4X. The world price
ratio Px/Py is P=200. It is
suggested, but not required, that you use a graph to help answer the
questions below. (Note that answers
may be fractions of a unit.)

Find the free trade equilibrium
quantity of exports.
What is the producer surplus in
this equilibrium?
Country H elects to offer a 25%
subsidy to exports of X. What is
the equilibrium quantity of exports with this subsidy?
What is the producer surplus after
the subsidy?
What is the government expenditure
on the subsidy?
What is H’s deadweight loss due to
the subsidy?

(30 points) Country H, which is large, exports
good X. Its excess supply curve is
given by P=100+4X. The world’s
excess demand curve for X is 600-2X.
It is suggested, but not required, that you use a graph to help
answer the questions below. (Note
that answers may be fractions of a unit.)

Find the free trade equilibrium
quantity and price of exports.
What is the producer surplus in
this equilibrium?
Country H elects to offer a 25%
subsidy to exports of X. What is
the equilibrium quantity of exports with this subsidy?
What is the producer surplus after
the subsidy?
What is the government expenditure
on the subsidy?
What is the deadweight loss due to
the subsidy?
Calculate the “Terms of Trade”
loss for H due to the subsidy.

(20 points) True or false. Explain your answers in clearly written
paragraphs. Quality of explanation
determines grade.

One possible development strategy
for a country is to simultaneously engage in import substitution and
export-driven growth.
A country that offers an export
subsidy for good X must also impose an import tariff for good X.

(20 points) Water sold in small plastic bottles
produces waste that contaminates the environment. Suppose the U.S. government passed
strict new laws that levied special taxes on water sold in plastic
bottles. One country, Fiji, has a
comparative advantage in producing bottled water, much of which is
consumed in the U.S. As a trade
economist, what is your perspective on the impact of this law on the U.S.
and on Fiji? Thinking beyond trade
issues, what is your economic perspective on the law?

Answer this question in a short essay (say, approximately
500 words).

Order your essay today and save 30% with the discount code: KIWI20