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.
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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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