The following graph shows the domestic supply of and demand for wheat in New Zealand. The world price (PWPW) of wheat is $255 per bushel 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 wheat and that there are no transportation or transaction costs associated with international trade in wheat. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Graph Input ToolMarket for Wheat in New Zealand435415I Price(Dollars per bushel)Supply255395Domestic Demand(Thousands ofbushels of wheat)Domestic Supply(Thousands ofbushels of wheat)36040375355335315295Demand275P.W2552354080120 160 200 240 280 320 360 400QUANTITY (Thousands of bushels of wheat)If New Zealand is open to international trade in wheat without any restrictions, it will import360 bushels of wheat.Suppose the New Zealand government wants to reduce imports to exactly 80,000 bushels of wheat to help domestic producers.A tariff of $per bushel will achieve this.A tariff set at this level would raise $in revenue for the New Zealand government.PRICE (Dollars per bushel)

A tariff is a tax imposed by a government of a country or of a supranational union on imports or…

Answered: The following graph shows the domestic…

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 wheat in New Zealand. The world price (PWPW) of wheat is $255 per bushel 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 wheat and that there are no transportation or transaction costs associated with international trade in wheat. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.

Graph Input Tool
Market for Wheat in New Zealand
435
415
I Price
(Dollars per bushel)
Supply
255
395
Domestic Demand
(Thousands of
bushels of wheat)
Domestic Supply
(Thousands of
bushels of wheat)
360
40
375
355
335
315
295
Demand
275
P.
W
255
235
40
80
120 160 200 240 280 320 360 400
QUANTITY (Thousands of bushels of wheat)
If New Zealand is open to international trade in wheat without any restrictions, it will import
360 bushels of wheat.
Suppose the New Zealand government wants to reduce imports to exactly 80,000 bushels of wheat to help domestic producers.
A tariff of $
per bushel will achieve this.
A tariff set at this level would raise $
in revenue for the New Zealand government.
PRICE (Dollars per bushel)

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