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4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for maize in Guatemala. The world price (PW) of maize is $250 per tonne 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

4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for maize in Guatemala. The world price (PW) of maize is $250 per tonne 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

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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4. Effects of a tariff on international trade

The following graph shows the domestic supply of and demand for maize in Guatemala. The world price (PW) of maize is $250 per tonne 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
The following graph shows the domestic supply of and demand for maize in Guatemala. The world price (Pw) of maize is $250 per tonne 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. 475 Domestic Demand Domestic Supply 450 425 400 375 350 325 300 275 Pw 250 225 0 40 80 120 180 200 240 280 320 360 400 QUANTITY (Tonnes of maize) If Guatemala is open to international trade in maize without any restrictions, it will import tonnes of maize. Suppose the Guatemalan government wants to reduce imports to exactly 160 tonnes of maize to help domestic producers. A tariff of s per tonne will achieve this. A tariff set at this level would raise S in revenue for the Guatemalan government. PRICE (Dollars per tonne)
Transcribed Image Text:The following graph shows the domestic supply of and demand for maize in Guatemala. The world price (Pw) of maize is $250 per tonne 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. 475 Domestic Demand Domestic Supply 450 425 400 375 350 325 300 275 Pw 250 225 0 40 80 120 180 200 240 280 320 360 400 QUANTITY (Tonnes of maize) If Guatemala is open to international trade in maize without any restrictions, it will import tonnes of maize. Suppose the Guatemalan government wants to reduce imports to exactly 160 tonnes of maize to help domestic producers. A tariff of s per tonne will achieve this. A tariff set at this level would raise S in revenue for the Guatemalan government. PRICE (Dollars per tonne)
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