3. Welfare effects of a tariff in a small countrySuppose Zambia is open to free trade in the world market for soybeans. Because of Zambia's small size, the demand for and supply of soybeans inZambia do not affect the world price. The following graph shows the domestic soybeans market in Zambia. The world price of soybeans is Pw = $400per ton.On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at thefree-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS).680Domestic DemandDomestic Supply640cs600580520PS480440400360320280153045607590105120135150QUANTITY (Tons of soybeans)If Zambia allows international trade in the market for soybeans, it will importtons of soybeans.Now suppose the Zambian government decides to impose a tariff of $40 on each imported ton of soybeans. After the tariff, the price Zambianconsumers pay for a ton of soybeans is $, and Zambia will importtons of soybeans.PRCE (Doll ars perton)

International trade is the exchange of capital, goods, and services across international borders or…

Answered: Suppose Zambia is open to free trade in…

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

See similar textbooks

Related questions

Question

3. Welfare effects of a tariff in a small country
Suppose Zambia is open to free trade in the world market for soybeans. Because of Zambia's small size, the demand for and supply of soybeans in
Zambia do not affect the world price. The following graph shows the domestic soybeans market in Zambia. The world price of soybeans is Pw = $400
per ton.
On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the
free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS).
680
Domestic Demand
Domestic Supply
640
cs
600
580
520
PS
480
440
400
360
320
280
15
30
45
60
75
90
105
120
135
150
QUANTITY (Tons of soybeans)
If Zambia allows international trade in the market for soybeans, it will import
tons of soybeans.
Now suppose the Zambian government decides to impose a tariff of $40 on each imported ton of soybeans. After the tariff, the price Zambian
consumers pay for a ton of soybeans is $
, and Zambia will import
tons of soybeans.
PRCE (Doll ars perton)

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Follow-up Questions

Read through expert solutions to related follow-up questions below.

Follow-up Question

Because Zambia participates in international trade in the market for soybeans, it will import

tons of soybeans.

Now suppose the Zambian government decides to impose a tariff of $10 on each imported ton of soybeans. Under the tariff, the price Zambian consumers pay for a ton of soybeans becomes

, and Zambia will import

tons of soybeans.

Use the following graph to show the effects of the $10 tariff

Solution

by Bartleby Expert

SEE SOLUTION

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions