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.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

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)
Transcribed Image Text: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)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 1 images

Blurred answer
Knowledge Booster
Cost of Tariff
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
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education