Suppose Jordan is open to free trade in the world market for oranges. Because of Jordan's small size, the demand for and supply of oranges in Jordan do not affect the world price. The following graph shows the domestic oranges market in Jordan. The world price of oranges is Pw = $800 per ton. Throughout this problem, assume that changes in trade policies in other nations do not significantly affect the world market for oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also assume that domestic supplies will satisfy domestic demand as much as possible before any exporting or importing takes place. 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 domestic producer surplus (PS). PRICE (Dollars per ton) 1280 1220 1160 1100 1040 980 920 860 800 740 680 0 Domestic Demand + 3 Domestic Supply 69 12 15 18 21 24 QUANTITY (Thousands of tons of oranges) 27 30 If Jordan allows international trade in the market for oranges, it will import your answer, accounting for the horizontal axis units.) Show the effects of the $120 tariff on the following graph. PS tons of oranges. (Note: Be sure to enter the full value for Now suppose the Jordanian government decides to impose a tariff of $120 on each imported ton of oranges. After the tariff, the domestic price of a ton of oranges will be $ , and Jordan will import tons of oranges.

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Chapter1: Making Economics Decisions
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PRICE (Dollars per ton)
1280 Domestic Demand
1220
1160
1100
1040
980
920
860
800
740
680
0
12
3 6 9
15 18 21 24
QUANTITY (Thousands of tons of oranges)
Consumer surplus
Producer surplus
Government revenue
Domestic Supply
Complete the following table to summarize your results from the previous two graphs.
Under Free Trade
(Dollars)
Under a Tariff
(Dollars)
of $
0
Based on your analysis, as a result of the tariff, Jordan's consumer surplus
by $
27
Pw
W
30
World Price Plus Tariff
î
CS
PS
3
Government Revenue
DWL
?
and producer surplus
by $
Taking into account how much revenue the tariff generates for the government, the net welfare effect is a
Transcribed Image Text:PRICE (Dollars per ton) 1280 Domestic Demand 1220 1160 1100 1040 980 920 860 800 740 680 0 12 3 6 9 15 18 21 24 QUANTITY (Thousands of tons of oranges) Consumer surplus Producer surplus Government revenue Domestic Supply Complete the following table to summarize your results from the previous two graphs. Under Free Trade (Dollars) Under a Tariff (Dollars) of $ 0 Based on your analysis, as a result of the tariff, Jordan's consumer surplus by $ 27 Pw W 30 World Price Plus Tariff î CS PS 3 Government Revenue DWL ? and producer surplus by $ Taking into account how much revenue the tariff generates for the government, the net welfare effect is a
Suppose Jordan is open to free trade in the world market for oranges. Because of Jordan's small size, the demand for and supply of oranges in Jordan
do not affect the world price. The following graph shows the domestic oranges market in Jordan. The world price of oranges is Pw = $800 per ton.
Throughout this problem, assume that changes in trade policies in other nations do not significantly affect the world market for oranges and that there
are no transportation or transaction costs associated with international trade in oranges. Also assume that domestic supplies will satisfy domestic
demand as much as possible before any exporting or importing takes place.
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 domestic producer surplus (PS).
PRICE (Dollars per ton)
1280
1220
1160
1100
1040
980
920
860
800
740
680
Domestic Demand
03
Domestic Supply
6
9 12 15 18 21 24
QUANTITY (Thousands of tons of oranges)
P
W
27 30
If Jordan allows international trade in the market for oranges, it will import
your answer, accounting for the horizontal axis units.)
Show the effects of the $120 tariff on the following graph.
CS
PS
?
tons of oranges. (Note: Be sure to enter the full value for
Now suppose the Jordanian government decides to impose a tariff of $120 on each imported ton of oranges. After the tariff, the domestic price of a
ton of oranges will be $
, and Jordan will import
tons of oranges.
Use the grey line (star symbol) to indicate the world price plus the tariff. Then, use the green triangle (triangle symbols) to show the consumer
surplus with the tariff and the purple triangle (diamond symbols) to show the domestic producer surplus with the tariff. Lastly, use the orange
quadrilateral (square symbols) to shade the area representing government revenue received from the tariff and the tan triangles (dash symbols) to
shade the areas representing the net loss or deadweight loss (DWL) caused by the tariff.
Transcribed Image Text:Suppose Jordan is open to free trade in the world market for oranges. Because of Jordan's small size, the demand for and supply of oranges in Jordan do not affect the world price. The following graph shows the domestic oranges market in Jordan. The world price of oranges is Pw = $800 per ton. Throughout this problem, assume that changes in trade policies in other nations do not significantly affect the world market for oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also assume that domestic supplies will satisfy domestic demand as much as possible before any exporting or importing takes place. 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 domestic producer surplus (PS). PRICE (Dollars per ton) 1280 1220 1160 1100 1040 980 920 860 800 740 680 Domestic Demand 03 Domestic Supply 6 9 12 15 18 21 24 QUANTITY (Thousands of tons of oranges) P W 27 30 If Jordan allows international trade in the market for oranges, it will import your answer, accounting for the horizontal axis units.) Show the effects of the $120 tariff on the following graph. CS PS ? tons of oranges. (Note: Be sure to enter the full value for Now suppose the Jordanian government decides to impose a tariff of $120 on each imported ton of oranges. After the tariff, the domestic price of a ton of oranges will be $ , and Jordan will import tons of oranges. Use the grey line (star symbol) to indicate the world price plus the tariff. Then, use the green triangle (triangle symbols) to show the consumer surplus with the tariff and the purple triangle (diamond symbols) to show the domestic producer surplus with the tariff. Lastly, use the orange quadrilateral (square symbols) to shade the area representing government revenue received from the tariff and the tan triangles (dash symbols) to shade the areas representing the net loss or deadweight loss (DWL) caused by the tariff.
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