Answer Happy

Suppose Bangladesh provides a production subsidy to the
production of textile and Bangladesh is a small economy that
exports textile.

(a) Use a domestic-market graph to show the effect of the
production subsidy on domestic consumer surplus, domestic producer
surplus, government expenditure, and total welfare;
(b) How would the effect on domestic consumer surplus change if
the consumers have to pay taxes to finance the government
expenditure?
(c) Between export subsidy and production subsidy, which policy
leads to a greater deadweight loss? Identify the extra deadweight
loss.
(d) Between export subsidy and production subsidy, which policy
is more preferred by domestic consumers (not accounting for the tax
payment)?