Chapter 10 Quiz for International Economics Tradia is a small export country. Suppose initially that the world price is $150. Due to successful lobbying activities, Tradia producers will now receive a...

Chapter 10 Quiz for International Economics
Tradia is a small export country. Suppose initially that the world price is $150. Due to successful lobbying activities, Tradia producers will now receive a subsidy of $25 per unit exported. Use the following figure to answer the following questions.
a. What will happen to exports as a result of the subsidy (be specific)? (2 points)
b. What effect will the subsidy have on consumer surplus, producer surplus and overall welfare? Explain in terms of the labeled areas in the graph (no need to calculate the $ values). (8 pts)


Chapter 10 Quiz for International Economics Tradia is a small export country. Suppose initially that the world price is $150. Due to successful lobbying activities, Tradia producers will now receive a subsidy of $25 per unit exported. Use the following figure to answer the following questions. a. What will happen to exports as a result of the subsidy (be specific)? (2 points) b. What effect will the subsidy have on consumer surplus, producer surplus and overall welfare? Explain in terms of the labeled areas in the graph (no need to calculate the $ values). (8 pts)