Two years ago, the WTO negotiated a package intended to reduce trade barriers. Developed countries agreed to eliminate farm export subsidies. (I exaggerated what actually happened.) Developed countries are net exporters of farm products.  As a group, developed countries comprise a large economy. Use appropriate diagrams and an explanation to show the economic welfare effects (i.e., changes in consumer surplus and producer surplus) of this reduction in farm export subsidies on: (a) developed countries (use one graph to represent them). (b) a small developing country which is a net importer of farm products.  The small country practices free trade.  (c) a small developing country which is a net exporter of farm products.  The small country practices free trade.

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  1. Two years ago, the WTO negotiated a package intended to reduce trade barriers. Developed countries agreed to eliminate farm export subsidies. (I exaggerated what actually happened.) Developed countries are net exporters of farm products.  As a group, developed countries comprise a large economy. Use appropriate diagrams and an explanation to show the economic welfare effects (i.e., changes in consumer surplus and producer surplus) of this reduction in farm export subsidies on:

(a) developed countries (use one graph to represent them).

(b) a small developing country which is a net importer of farm products.  The small country practices free trade.

 (c) a small developing country which is a net exporter of farm products.  The small country practices free trade.

 

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