4. Effects of a tariff on international tradeThe following graph shows the domestic supply of and demand for soybeans in Guatemala. The world price (Pw) of soybeans is $550 per ton and isrepresented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the worldprice of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume thatdomestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.830Domestic DemandDomestic Supply795760725O 690655620585Pw550515480306006120 150 180210240270300QUANTITY (Tons of soybeans)PRICE (Dollars per ton) If Guatemala is open to international trade in soybeans without any restrictions, it will importtons of soybeans.Suppose the Guatemalan government wants to reduce imports to exactly 60 tons of soybeans to help domestic producers. A tariff of $perton will achieve this.A tariff set at this level would raisein revenue for the Guatemalan government.

A country imports a good or service when the world price is less than the market price while it…

If Guatemala is open to international trade in soybeans without any restrictions, it will import tons of soybeans. Suppose the Guatemalan government wants to reduce imports to exactly 60 tons of soybeans to help domestic producers. A tariff of $ per ton will achieve this. A tariff set at this level would raise in revenue for the Guatemalan government.

If Guatemala is open to international trade in soybeans without any restrictions, it will import tons of soybeans. Suppose the Guatemalan government wants to reduce imports to exactly 60 tons of soybeans to help domestic producers. A tariff of $ per ton will achieve this. A tariff set at this level would raise in revenue for the Guatemalan government.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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