Draw the graph that describes the market for grain

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China is a major producer of grains such as wheat, corn, and rice. In 2008 the Chinese government, concerned that grain exports were driving up food prices for domestic consumers, imposed a tax on grain exports. Label areas on your graphs with the letters A, B, C... like we did in class to ensure clarity in your answers.

Draw the graph that describes the market for grain in an exporting country. Use this graph as the starting point to answer the following questions.

How does an export tax affect domestic grain prices?

How does it affect the domestic consumers' surplus, producers' surplus, and government revenue?

What happens to total surplus in China, as measured by the sum of consumer surplus, producer surplus, and tariff revenue?

Reference no: EM132445035

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