The following graph shows the domestic demand for and supply of oranges in Guatemala. The world price (Pw) of oranges is $520 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars perton) 835 800 765 730 695 660 825 500 555 520 405 Domestic Demand 040 Domestic Supply 80 120 180 200 240 280 320 350 400 QUANTITY (Tons of oranges) If Guatemala is open to international trade in oranges without any restrictions, it will import Suppose the Guatemalan government wants to reduce imports to exactly 80 tons of oranges to help domestic producers. A tariff of will achieve this. A tariff set at this level would raise S tons of oranges. in revenue for the Guatemalan government. per ton

The following graph shows the domestic demand for and supply of oranges in Guatemala. The world price (Pw) of oranges is $520 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars perton) 835 800 765 730 695 660 825 500 555 520 405 Domestic Demand 040 Domestic Supply 80 120 180 200 240 280 320 350 400 QUANTITY (Tons of oranges) If Guatemala is open to international trade in oranges without any restrictions, it will import Suppose the Guatemalan government wants to reduce imports to exactly 80 tons of oranges to help domestic producers. A tariff of will achieve this. A tariff set at this level would raise S tons of oranges. in revenue for the Guatemalan government. per ton

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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