Problem
A small country can import a gond at a world price of 10 per unit. The domestic supply curve of the good is
The demand curve is
S = 50 + 51.
D = 400 - 10P.
In addition, each unit of production yields a marginal social benefit of ID.
a. Calculate the total effect on welfare of a tariff of 5 per unit levied on imports.
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 tarif?
d. What would the prim, production subsidy be?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.