extraproblem2

extraproblem2 - Extra problem for Chapter 2 of Notes...

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September 18, 2006 Extra problem for Chapter 2 of Notes. Consider a small country that produces both corn and umbrellas; this country imports umbrellas. The world relative price of corn is p w .(Um b r e l l a is the numeraire good: its price is set to 1.) The country imposes a small tax on corn production. Using a graph, identify the production and consumption points under two scenarios: (i) the government returns the tax revenue to consumers in a lump sum, and (ii) the government throws the tax revenue into the sea. Identify the production point under free trade as A; the consumption
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This note was uploaded on 08/01/2008 for the course ARE 201 taught by Professor Karp during the Fall '07 term at Berkeley.

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extraproblem2 - Extra problem for Chapter 2 of Notes...

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