China is a major producer of grains, such aswheat, corn, and rice. In 2008 the
Chapter 9, Problem 9(choose chapter or problem)
China is a major producer of grains, such aswheat, corn, and rice. In 2008 the Chinesegovernment, concerned that grain exports weredriving up food prices for domestic consumers,imposed a tax on grain exports.a. Draw the graph that describes the market forgrain in an exporting country. Use this graphas the starting point to answer the followingquestions.b. How does an export tax affect domestic grainprices?c. How does it affect the welfare of domesticconsumers, the welfare of domesticproducers, and government revenue?d. What happens to total welfare in China, asmeasured by the sum of consumer surplus,producer surplus, and tax revenue?
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