On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). If Kenya allows international trade in the market for wheat, it will import tonnes of wheat. Now suppose the Kenyan government decides to impose a tariff of $60 on each imported tonne of wheat. After the tariff, the price Kenyan consumers pay for a tonne of wheat is , and Kenya will import tonnes of wheat.
On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). If Kenya allows international trade in the market for wheat, it will import tonnes of wheat. Now suppose the Kenyan government decides to impose a tariff of $60 on each imported tonne of wheat. After the tariff, the price Kenyan consumers pay for a tonne of wheat is , and Kenya will import tonnes of wheat.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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3. Welfare effects of a tariff in a small country
Suppose Kenya is open to free trade in the world market for wheat. Because of Kenya's small size, the demand for and supply of wheat in Kenya do not affect the world price . The following graph shows the domestic wheat market in Kenya. The world price of wheat is PWPW = $250 per tonne.
On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS).
If Kenya allows international trade in the market for wheat, it will import
tonnes of wheat.
Now suppose the Kenyan government decides to impose a tariff of $60 on each imported tonne of wheat. After the tariff, the price Kenyan consumers pay for a tonne of wheat is , and Kenya will import tonnes of wheat.
Show the effects of the $60 tariff on the following graph.
Transcribed Image Text:?.
490
Domestic Demand
Domestic Supply
460
CS
430
400
370
PS
340
310
280
P,
250
220
190
0.
60
80
100
120
140
160
180
200
QUANTITY (Tonnes of wheat)
40
20
PRICE (Dollars per tonne)
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