4. Effects of a tariff on international trade The fallowing graph shows the domestic supply of and demand for soybeans in Colombia. The world price (Pw) of soybeans is $545 per ton and represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the wo. price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that dom suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 860 Domestic Demand Domestic Supply

4. Effects of a tariff on international trade The fallowing graph shows the domestic supply of and demand for soybeans in Colombia. The world price (Pw) of soybeans is $545 per ton and represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the wo. price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that dom suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 860 Domestic Demand Domestic Supply

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The following image shows the market for wheat for the country of Palatino. sº is the domestic supply of wheat, and DD is the domestic demand for wheat. Suppose the world price of wheat is $9 per bushel. Suppose a specific tariff of $6 is imposed on each bushel of wheat imported. The net welfare loss from the tariff is represented by the area Figure 19.4 SO Price($) 25 H 15 A E DD 200 300 600 700 Quantity of Wheat (thousands of bushels) a. B and D b. I and H O c. E O d. F e. A and C
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