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The following graph shows the domestic supply of and demand for soybeans in Honduras. The world price (Pw) of soybeans is $530 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 890 Domestic Demand Domestic Supply 850 810 770 730 690 650 610 570 Pw 530 490 50 100 150 200 250 300 350 400 450 500 QUANTITY (Tons of soybeans) PRICE (Dollars per ton)

The following graph shows the domestic supply of and demand for soybeans in Honduras. The world price (Pw) of soybeans is $530 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 890 Domestic Demand Domestic Supply 850 810 770 730 690 650 610 570 Pw 530 490 50 100 150 200 250 300 350 400 450 500 QUANTITY (Tons of soybeans) PRICE (Dollars per ton)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The following graph shows the domestic supply of and demand for soybeans in Honduras. The world price (\(P_w\)) of soybeans is $530 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. ### Graph Explanation - **Axes:** - The vertical axis represents the price of soybeans in dollars per ton, ranging from $490 to $890. - The horizontal axis shows the quantity of soybeans in tons, ranging from 0 to 500. - **Lines:** - The **Domestic Demand** curve is shown by the downward-sloping blue line. It indicates that as the price decreases, the quantity demanded increases. - The **Domestic Supply** curve is shown by the upward-sloping orange line. It reflects that as the price increases, the quantity supplied increases. - The horizontal black line represents the world price (\(P_w\)) at $530 per ton. - **Intersection Points:** - The intersection of the domestic supply and demand curves would determine the equilibrium price if no trade existed. - The intersection of the world price with the domestic supply and demand lines indicates the quantities produced and consumed at the world price. The graph demonstrates that at the world price \(P_w\), the quantity of soybeans that Honduras can domestically supply does not meet the domestic demand, suggesting a dependence on imports if domestic consumption is to match demand or opportunities for export if there's excess supply. Domestic suppliers aim to satisfy domestic demand maximally before engaging in international trade.
Transcribed Image Text:The following graph shows the domestic supply of and demand for soybeans in Honduras. The world price (\(P_w\)) of soybeans is $530 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. ### Graph Explanation - **Axes:** - The vertical axis represents the price of soybeans in dollars per ton, ranging from $490 to $890. - The horizontal axis shows the quantity of soybeans in tons, ranging from 0 to 500. - **Lines:** - The **Domestic Demand** curve is shown by the downward-sloping blue line. It indicates that as the price decreases, the quantity demanded increases. - The **Domestic Supply** curve is shown by the upward-sloping orange line. It reflects that as the price increases, the quantity supplied increases. - The horizontal black line represents the world price (\(P_w\)) at $530 per ton. - **Intersection Points:** - The intersection of the domestic supply and demand curves would determine the equilibrium price if no trade existed. - The intersection of the world price with the domestic supply and demand lines indicates the quantities produced and consumed at the world price. The graph demonstrates that at the world price \(P_w\), the quantity of soybeans that Honduras can domestically supply does not meet the domestic demand, suggesting a dependence on imports if domestic consumption is to match demand or opportunities for export if there's excess supply. Domestic suppliers aim to satisfy domestic demand maximally before engaging in international trade.
If Honduras is open to international trade in soybeans without any restrictions, it will import [blank] tons of soybeans. Suppose the Honduran government wants to reduce imports to exactly 200 tons of soybeans to help domestic producers. A tariff of $[blank] per ton will achieve this. A tariff set at this level would raise $[blank] in revenue for the Honduran government.
Transcribed Image Text:If Honduras is open to international trade in soybeans without any restrictions, it will import [blank] tons of soybeans. Suppose the Honduran government wants to reduce imports to exactly 200 tons of soybeans to help domestic producers. A tariff of $[blank] per ton will achieve this. A tariff set at this level would raise $[blank] in revenue for the Honduran government.
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