The following graph shows the domestic supply of and demand for maize in Burundi. The world price (Pw) of maize is $270 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 maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Domestic Demand Domestic Supply 450 430 410 300 370 350 330 310 200 270 250 O 40 80 120 180 200 240 280 320 300 400 QUANTITY (Tons of maize) If Burundi is open to international trade in maize without any restrictions, it will import |tons of maize. Suppose the Burundian government wants to reduce imports to exactly 160 tons of maize to help domestic producers. A tariff of S |per ton will achieve this. A tariff set at this level would raise S in revenue for the Burundian government. PRICE (Dollars per ton)
The following graph shows the domestic supply of and demand for maize in Burundi. The world price (Pw) of maize is $270 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 maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Domestic Demand Domestic Supply 450 430 410 300 370 350 330 310 200 270 250 O 40 80 120 180 200 240 280 320 300 400 QUANTITY (Tons of maize) If Burundi is open to international trade in maize without any restrictions, it will import |tons of maize. Suppose the Burundian government wants to reduce imports to exactly 160 tons of maize to help domestic producers. A tariff of S |per ton will achieve this. A tariff set at this level would raise S in revenue for the Burundian government. PRICE (Dollars per ton)
Chapter12: The Partial Equilibrium Competitive Model
Section: Chapter Questions
Problem 12.8P
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