2. Welfare effects of a tariff in a small country Suppose Venezuela is open to free trade in the world market for soybeans. Because of Venezuela's small size, the demand for and supply of soybeans in Venezuela do not affect the world price. The following graph shows the domestic soybeans market in Venezuela. The world price of soybeans is Pw $400 per ton. = On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). PRICE (Dollars per ton) 680 Domestic Demand 640 600 560 520 480 440 400 360 320 280 + 05 10 15 20 25 30 35 QUANTITY (Tons of soybeans) Domestic Supply 7.1 at PW 40 45 50 If Venezuela allows international trade in the market for soybeans, it will import CS PS Now suppose the Venezuelan government decides to impose a tariff of $40 on each imported ton of soybeans. After the tariff, the price Venezuelan consumers pay for a ton of soybeans is $ , and Venezuela will import tons of soybeans. Show the effects of the $40 tariff on the following graph. If Venezuela allows international trade in the market for soybeans, it will import tons of soybeans. tons of soybeans. Now suppose the Venezuelan government decides to impose a tariff of $40 on each imported ton of soybeans. After the tariff, the price Venezuelan consumers pay for a ton of soybeans is $ , and Venezuela will import tons of soybeans.
2. Welfare effects of a tariff in a small country Suppose Venezuela is open to free trade in the world market for soybeans. Because of Venezuela's small size, the demand for and supply of soybeans in Venezuela do not affect the world price. The following graph shows the domestic soybeans market in Venezuela. The world price of soybeans is Pw $400 per ton. = On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). PRICE (Dollars per ton) 680 Domestic Demand 640 600 560 520 480 440 400 360 320 280 + 05 10 15 20 25 30 35 QUANTITY (Tons of soybeans) Domestic Supply 7.1 at PW 40 45 50 If Venezuela allows international trade in the market for soybeans, it will import CS PS Now suppose the Venezuelan government decides to impose a tariff of $40 on each imported ton of soybeans. After the tariff, the price Venezuelan consumers pay for a ton of soybeans is $ , and Venezuela will import tons of soybeans. Show the effects of the $40 tariff on the following graph. If Venezuela allows international trade in the market for soybeans, it will import tons of soybeans. tons of soybeans. Now suppose the Venezuelan government decides to impose a tariff of $40 on each imported ton of soybeans. After the tariff, the price Venezuelan consumers pay for a ton of soybeans is $ , and Venezuela will import tons of soybeans.
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter1: Expressions And Functions
Section1.8: Interpreting Graphs Of Functions
Problem 4CYU
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