4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of oranges in Honduras. The world price (Pw) of oranges is $535 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 895 855 815 775 735 695 655 615 575 535 495 0 Domestic Demand 50 Domestic Supply PW 100 150 200 250 300 350 400 450 500 QUANTITY (Tons of oranges) A tariff set at this level would raise $ ? If Honduras is open to international trade in oranges without any restrictions, it will import Suppose the Honduran government wants to reduce imports to exactly 100 tons of oranges to help domestic producers. A tariff of $ I will achieve this. tons of oranges. in revenue for the Honduran government. per ton

4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of oranges in Honduras. The world price (Pw) of oranges is $535 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 895 855 815 775 735 695 655 615 575 535 495 0 Domestic Demand 50 Domestic Supply PW 100 150 200 250 300 350 400 450 500 QUANTITY (Tons of oranges) A tariff set at this level would raise $ ? If Honduras is open to international trade in oranges without any restrictions, it will import Suppose the Honduran government wants to reduce imports to exactly 100 tons of oranges to help domestic producers. A tariff of $ I will achieve this. tons of oranges. in revenue for the Honduran government. 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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