2. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for maize in Panama. The world price (Pw) of maize is $270 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 540 Domestic Demand Domestic Supply 510 480 450 420 390 360 330 300 Pw 270 240 30 60 90 120 150 180 210 240 270 300 QUANTITY (Tons of maize) If Panama is open to international trade in maize without any restrictions, it will import tons of maize. Suppose the Panamanian government wants to reduce imports to exactly 60 tons of maize to help domestic producers. A tariff of $ per ton will achieve this. A tariff set at this level would raise $ in revenue for the Panamanian government. PRICE (Dollars per ton)

2. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for maize in Panama. The world price (Pw) of maize is $270 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 540 Domestic Demand Domestic Supply 510 480 450 420 390 360 330 300 Pw 270 240 30 60 90 120 150 180 210 240 270 300 QUANTITY (Tons of maize) If Panama is open to international trade in maize without any restrictions, it will import tons of maize. Suppose the Panamanian government wants to reduce imports to exactly 60 tons of maize to help domestic producers. A tariff of $ per ton will achieve this. A tariff set at this level would raise $ in revenue for the Panamanian government. PRICE (Dollars per ton)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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