3610 PS7 - Cornell University Fall 2009 Economics 3610:...

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Cornell University Fall 2009 Economics 3610: Problem Set 7 Due 12/2/09 1. True/False/Explain a. If an importing country imposes a tariff in response to an exporting country’s subsidy that has lowered the world price of a good, then the world price of the good will fall even further. b. If it makes sense for there to be a minimum wage at the national level, then there should be a minimum wage at the international level as well. 2. Export Subsidy Consider a large country with export subsidies in place for agriculture. Suppose the country changes its policy and decides to cut its subsidies in half. a. Are there gains or losses to the large country, or is it ambiguous? What is the impact on domestic prices for agriculture and on the world price? b. Suppose a small food-importing country abroad responds to the lowered subsidies by lowering its tariffs on agriculture by the same amount. Are there gains or losses to the small country, or is it ambiguous? Explain. c.
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This note was uploaded on 12/10/2011 for the course BTRY 3010 at Cornell University (Engineering School).

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3610 PS7 - Cornell University Fall 2009 Economics 3610:...

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