Straight line upward sloping domestic supply curve

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Reference no: EM131212514

A small country has a straight-line, upward-sloping domestic supply curve and a straight-line, downward-sloping domestic demand curve for one of its key export products. The world price for this product is $150 per ton.

The country currently has an export tax of $10 per unit, and it exports 10 million tons per year.

The country's government is considering reducing its export tax to $5 per ton , and it asks you to determine if this will reduce by half the inefficiency caused by the export tax.

Use a graph to conduct your analysis and provide your response.

Reference no: EM131212514

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