Question

Rank the welfare of the entire country with the following policies and explain your reasoning.

(a) Export subsidy of US$5 per pound of sugar in a small country

(b) Export subsidy of US$5 per pound of sugar in a large country

(c) Production subsidy of US$5 per pound of sugar in a small country

Answer 1

Rank 1:- Export subsidy of US$5 per pound of sugar in a small country. because of small country the population also small. Government encourage them to export the Sugar in different countries to get foreign money which will increase the growth of country. so when government give them subsidy us$5 that's will Big amount for population and they will attractive to export more and more. so this is 1st rank welfare

Rank 2:- Production subsidy of US$5 per pound of sugar in a small country. in the small country when the government give subsidy to production of sugar then they will attract to produce more and more. so increase in domestic production will restricted the import from other countries so the country will save their money and earn by export.

Rank3:- Export subsidy of US$5 per pound of sugar in a large country. this is not enough money to give subsidy them because the high population and high expenses they are not attracted to export more. but still they are exporting little by this policy.