Suppose Bolivia is open to free trade in the world market for soybeans. Since Bolivia is small relative to the international market, the demand for andsupply of soybeans in Bolivia have no impact on the world price. The following graph shows the domestic market for soybeans in Bolivia. The worldprice of a ton of soybeans is Pw $250.On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at thefree-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS).(?)PRICE (Dollars perton)460430400370PRICE (Dollars per ton)340310200250220190160400Because Bolivia participates in international trade in the market for soybeans, it will importUse the following graph to show the effects of the $30 tariff.430400Now suppose the Bolivian government decides to impose a tariff of $30 on each imported ton of soybeans. Under the tariff, the price Bolivianconsumers pay for a ton of soybeans becomes $and Bolivia will importtons of soybeans.370340Ise the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surpith the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (squarembols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areasrepresenting deadweight loss (DWL) caused by the tariff.310280250Domestic Demand0 25 5022019016075 100 125 150 175 200 225 250QUANTITY (Tons of soybeans)Domestic Supply0Domestic Demand25 50CSDomestic SupplyPSPIN75 100 125 150 175 200 225 250QUANTITY (Tons of soybeans)World Price Plus TariffCSPStons of soybeans.Government RevenueDWL(?) Complete the following table to summarize your results from the previous two graphs.With Free Trade(Dollars)With a Tariff(Dollars)Consumer SurplusProducer SurplusGovernment Revenue0Based on your analysis, as a result of the tariff, Bolivia's consumer surplusby S, and the government collects $$producer surplusin revenue. Therefore, the net welfare effect is a of

In the normal way, deadweight loss is often an outcome of government policies such as price floors,…

Suppose Bolivia is open to free trade in the world market for soybeans. Since Bolivia is small relative to the international market, the demand for and supply of soybeans in Bolivia have no impact on the world price. The following graph shows the domestic market for soybeans in Bolivia. The world price of a ton of soybeans is P - $250. 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). PRICE (Dollars perton) 400 Domestic Demand 400 370 340 310 200 250 220 190 160 0 25 Domestic Supply 50 75 100 125 150 175 200 225 QUANTITY (Tons of soybeans) 250 8 PS Because Bolivia participates in international trade in the market for soybeans, it will import tons of soybeans. Now suppose the Bolivian government decides to impose a tariff of $30 on each imported ton of soybeans. Under the tariff, the price Bolivian consumers pay for a ton of soybeans becomes 5 and Bolivia will import[ tons of soybeans.

Suppose Bolivia is open to free trade in the world market for soybeans. Since Bolivia is small relative to the international market, the demand for and supply of soybeans in Bolivia have no impact on the world price. The following graph shows the domestic market for soybeans in Bolivia. The world price of a ton of soybeans is P - $250. 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). PRICE (Dollars perton) 400 Domestic Demand 400 370 340 310 200 250 220 190 160 0 25 Domestic Supply 50 75 100 125 150 175 200 225 QUANTITY (Tons of soybeans) 250 8 PS Because Bolivia participates in international trade in the market for soybeans, it will import tons of soybeans. Now suppose the Bolivian government decides to impose a tariff of $30 on each imported ton of soybeans. Under the tariff, the price Bolivian consumers pay for a ton of soybeans becomes 5 and Bolivia will import[ tons of soybeans.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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