Answer Happy

S=20+20P and D=100-20P are Home's supply and demand curves for wheat. S =40+20P and D = 80-20P are Foreign's supply and demand curves for wheat. Suppose that Foreign pays a subsidy of $0.50 per unit of wheat it exports On the graph to the right, show the effects of the subsidy on Foreign 1) Show the domestic price of wheat in Foreign. Using the line drawing tool, draw a horizontal line at the correct price. Label the line Pg.. 2) Show the price that Home importers pay for wheat Using the line drawing tool, draw a horizontal line at the correct price. Label the line Pg. Label the point Q, Label the point Q 3) Using the point drawing tool, indicate the quantity supplied by Foreign 4) Using the point drawing tool, indicate the quantity demanded by Foreign Carefully follow the instructions above and only draw the required objects. Examine the welfare effects of the subsidy on Foreign. (Round each answer to two decimal places.) Prion, P Droreign wot Foreign 645 10 20 30 40 50 60 70 80 90 100 110 120 Quantity Q

1) The loss of consumer surplus is 2) The gain in producer surplus is 3) The government revenue is 4) The efficiency loss is 5) The terms of trade gain is