Question2: Assume in order to increase the export of Coca Cola produced in Mexico to neighbouring countries the Government of Mexico decided to provide export subsidies to Coca Cola and farmers.

Question 2                                                                                                                  (11 marks)

Assume in order to increase the export of Coca Cola produced in Mexico to neighbouring countries the Government of Mexico decided to provide export subsidies to Coca Cola and farmers. Use the figure below to answer the questions that follow.

1. Do you think Mexico would benefit after providing export subsidies to farmers and Coca Cola producers?                                                                                                                                           7 marks
2. Suppose USA provided export subsidies to Coca Cola producers and farmers. Examine the effects of export subsidies on importing countries. 4 marks