4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in Colombia. The world price (Pw) of soybeans is $550 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. PRICE (Dollars per ton) 830 Domestic Demand. 795 760 725 690 655 620 585 550 515 480 0 + 1 1 Domestic Supply I 1 A tariff set at this level would raise $ Pw 30 60 90 120 150 180 210 240 270 300 QUANTITY (Tons of soybeans) ? If Colombia is open to international trade in soybeans without any restrictions, it will import Suppose the Colombian government wants to reduce imports to exactly 120 tons of soybeans to help domestic producers. A tariff of $ will achieve this. tons of soybeans. in revenue for the Colombian government. per ton

4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in Colombia. The world price (Pw) of soybeans is $550 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. PRICE (Dollars per ton) 830 Domestic Demand. 795 760 725 690 655 620 585 550 515 480 0 + 1 1 Domestic Supply I 1 A tariff set at this level would raise $ Pw 30 60 90 120 150 180 210 240 270 300 QUANTITY (Tons of soybeans) ? If Colombia is open to international trade in soybeans without any restrictions, it will import Suppose the Colombian government wants to reduce imports to exactly 120 tons of soybeans to help domestic producers. A tariff of $ will achieve this. tons of soybeans. in revenue for the Colombian government. per ton

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 8PA

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