Estimate welfare impacts that would occur with such a tarrif

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Question: 1. It has been said that U.S. consumers/taxpayers ended up paying "twice" for a U.S. wheat export subsidy program. Is there any basis for such a claim?

2. Suppose that a (small) country is an importer of good X, for which the current world price is $8. At that price with free trade, home producers are supplying 500 units of good X and the country is importing 300 units. It is now rumored that a 10 percent import duty will be imposed on good X. Estimate the welfare impacts that would occur with such a tariff, given that the elasticity of demand by consumers for good X is 2 2.0 and that the elasticity of home supply is 1.6.

Reference no: EM132177283

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