ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:730
700
670
640
610
s80
550
520
490
460
50
100
150 200 25o
300 350 400
450
500
QUANTITY (Tons of soybeans)
If Venezuela is open to international trade in soybeans without any restrictions, it will import
tons of soybeans.
Suppose the Venezuelan government wants to reduce imports to exactiy 200 tons of soybeans to help domestic producers A tariff of 5
ton will achieve this.
per
A tariff set at this level would raise 5
in revenue for the Venezuelan government.
PRICE (Dollars per ton)
Transcribed Image Text:4. Effects of a tariff on international trade
The following graph shows the domestic supply of and demand for soybeans in Venezuela. The world price (Pw) of soybeans is $520 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 satisty domestic demand as much as possible before any exporting or importing takes place.
Domestic Supply
700
Domestic Demand
730
640
10
3D
400
100
IND
200
250
300
300
400
450
s00
QUANTITY (Tons of soybeans)
PRICE (Dotars per ton)
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