2. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for maize in Panama. 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. 540 Domestic Demand Domestic Supply 510 480 450 420 390 360 330 300 Pw 270 240 30 60 90 120 150 180 210 240 270 300 QUANTITY (Tons of maize) If Panama is open to international trade in maize without any restrictions, it will import tons of maize. Suppose the Panamanian government wants to reduce imports to exactly 60 tons of maize to help domestic producers. A tariff of $ per ton will achieve this. A tariff set at this level would raise $ in revenue for the Panamanian government. PRICE (Dollars per ton)
2. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for maize in Panama. 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. 540 Domestic Demand Domestic Supply 510 480 450 420 390 360 330 300 Pw 270 240 30 60 90 120 150 180 210 240 270 300 QUANTITY (Tons of maize) If Panama is open to international trade in maize without any restrictions, it will import tons of maize. Suppose the Panamanian government wants to reduce imports to exactly 60 tons of maize to help domestic producers. A tariff of $ per ton will achieve this. A tariff set at this level would raise $ in revenue for the Panamanian government. PRICE (Dollars per ton)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: Application: International Trade
Section: Chapter Questions
Problem 2PA
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Transcribed Image Text:2. Effects of a tariff on international trade
The following graph shows the domestic supply of and demand for maize in Panama. 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.
540
Domestic Demand
Domestic Supply
510
480
450
420
390
360
330
300
Pw
270
240
30
60
90
120 150
180
210
240 270 300
QUANTITY (Tons of maize)
If Panama is open to international trade in maize without any restrictions, it will import
tons of maize.
Suppose the Panamanian government wants to reduce imports to exactly 60 tons of maize to help domestic producers. A tariff of $
per ton
will achieve this.
A tariff set at this level would raise $
in revenue for the Panamanian government.
PRICE (Dollars per ton)
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