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assume that the eu subsidizes the exports of tomatoes to support employment in agriculture supply and demand of european producers and consumers are equal to p2005qs and p500qd respectively 29044
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If the government subsidizes growers at 4 a pound, who gains and who loses from the subsidy? What is the deadweight loss? Could the subsidy be regarded as being fair? | Numerade
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Suppose that Country X subsidizes its exports and Country Y imposes a "countervailing" tariff that offsets the subsidy's effect, so that in the end, relative prices in Country Y are unchanged. What happens to the terms of trade? What about welfare in the two countries? Suppose, on the other hand, that Country Y retaliates with an export subsidy of its own. Contrast the result. | Numerade
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