Suppose Zambia is open to free trade in the world market for soybeans. Since Zambia is small relative to the international market, the demand forand supply of soybeans in Zambia have no impact on the world price. The following graph shows the domestic market for soybeans in Zambia. Theworld 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 thefree-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS).?PRICE (Dollars per ton)460 Domestic Demand4304003703403102002502201901600 2550Domestic Supply75 100 125 150 175 200 225 250QUANTITY (Tons of soybeans)75 100 125 150 175 200 225 250QUANTITY (Tons of soybeans)PSBecause Zambia participates in international trade in the market for soybeans, it will importNow suppose the Zambian government decides to impose a tariff of $30 on each imported ton of soybeans. Under the tariff, the price Zambianconsumers pay for a ton of soybeans becomesand Zambia will importtons of soybeans.tons of soybeans. Use the following graph to show the effects of the $30 tariff.Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surpluswith the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (squaresymbols) to shade the area répresenting government revenue received from the tariff and the tan points (rectangle symbols) to shade the areasrepresenting deadweight loss (DWL) caused by the tariff.PRICE (Dollars per ton)$ 8 8 2 2 2 8 8 8 8 8460400370340310200250220151901600Domestic Demand2550 75100 125125 150QUANTITY (Tons of soybeans)Consumer SurplusProducer SurplusGovernment RevenueDomestic Supply175 200 2250P225 250Complete the following table to summarize your results from the previous two graphsWith Free Trade(Dollars)With a Tariff(Dollars)Based on your analysis, as a result of the tariff, Zambia's consumer surplusby sand the government collects4World Price Plus TariffCSPSGovernment RevenueDWL(?)by Sproducer surplusin revenue. Therefore, the net welfare effect is a of

This can be described as a concept that is often an outcome of policies of the government such as…

Suppose Zambia is open to free trade in the world market for soybeans. Since Zambia is small relative to the international market, the demand for and supply of soybeans in Zambia have no impact on the world price. The following graph shows the domestic market for soybeans in Zambia. The world price of a ton of soybeans is Pir- $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 per ton) 440 430 400 370 340 310 200 250 220 190 Domestic Demand Domestic Supply PS

Suppose Zambia is open to free trade in the world market for soybeans. Since Zambia is small relative to the international market, the demand for and supply of soybeans in Zambia have no impact on the world price. The following graph shows the domestic market for soybeans in Zambia. The world price of a ton of soybeans is Pir- $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 per ton) 440 430 400 370 340 310 200 250 220 190 Domestic Demand Domestic Supply PS

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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