D D The following graph shows the domestic demand for and supply of oranges in Guatemala. The world price (Pw) of oranges is $525 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) 930 Domestic Demand Domestic Supply 885 840 795 750 705 660 615 30,525 570 525 Pw 480 0 30 60 90 120 150 180 210 240 QUANTITY (Tons of oranges) 270 300 If Guatemala is open to international trade in oranges without any restrictions, it will import 240 tons of oranges. Suppose the Guatemalan government wants to reduce imports to exactly 120 tons of oranges to help domestic producers. A tariff of $ will achieve this. A tariff set at this level would raise $ in revenue for the Guatemalan government. per ton

Principles of Economics, 7th Edition (MindTap Course List)
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Chapter9: Application: International Trade
Section: Chapter Questions
Problem 8PA
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D
D
The following graph shows the domestic demand for and supply of oranges in Guatemala. The world price (Pw) of oranges is $525 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)
930 Domestic Demand
Domestic Supply
885
840
795
750
705
660
615
30,525
570
525
Pw
480
0
30
60
90 120 150 180 210 240
QUANTITY (Tons of oranges)
270
300
If Guatemala is open to international trade in oranges without any restrictions, it will import
240 tons of oranges.
Suppose the Guatemalan government wants to reduce imports to exactly 120 tons of oranges to help domestic producers. A tariff of $
will achieve this.
A tariff set at this level would raise $
in revenue for the Guatemalan government.
per ton
Transcribed Image Text:D D The following graph shows the domestic demand for and supply of oranges in Guatemala. The world price (Pw) of oranges is $525 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) 930 Domestic Demand Domestic Supply 885 840 795 750 705 660 615 30,525 570 525 Pw 480 0 30 60 90 120 150 180 210 240 QUANTITY (Tons of oranges) 270 300 If Guatemala is open to international trade in oranges without any restrictions, it will import 240 tons of oranges. Suppose the Guatemalan government wants to reduce imports to exactly 120 tons of oranges to help domestic producers. A tariff of $ will achieve this. A tariff set at this level would raise $ in revenue for the Guatemalan government. per ton
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