4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in Zambia. The world price (Pw) of soybeans is $520 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 soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 920 Domestic Demand Domestic Supply 870 820 770 720 670 820 570 Pw 520 470 420 O 20 40 60 80 100 120 140 180 180 200 QUANTITY (Tons of soybeans) If Zambia is open to international trade in soybeans without any restrictions, it will import | | tons of soybeans. Suppose the Zambian government wants to reduce imports to exactly 40 tons of soybeans to help domestic producers. A tariff of S per ton will achieve this. A tariff set at this level would raise 5 in revenue for the Zambian government. PRICE (Dollars per ton)

4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in Zambia. The world price (Pw) of soybeans is $520 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 soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 920 Domestic Demand Domestic Supply 870 820 770 720 670 820 570 Pw 520 470 420 O 20 40 60 80 100 120 140 180 180 200 QUANTITY (Tons of soybeans) If Zambia is open to international trade in soybeans without any restrictions, it will import | | tons of soybeans. Suppose the Zambian government wants to reduce imports to exactly 40 tons of soybeans to help domestic producers. A tariff of S per ton will achieve this. A tariff set at this level would raise 5 in revenue for the Zambian 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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Lesson 12 Question 1
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