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4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of limes in Guatemala. The world price (Pw) of limes is $800 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of limes and that there are no transportation or transaction costs associated with international trade in limes. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 1120 1080 1040 1000 140 880 840 600 760 720 Domestic Demand 1 1 1 Domestic Supply I I 0 50 100 150 200 250 300 350 400 450 QUANTITY (Tons of limes) A tariff set at this level would raise s Pw 500 ? If Guatemala is open to international trade in limes without any restrictions, it will import Suppose the Guatemalan government wants to reduce imports to exactly 200 tons of limes to help domestic producers. A tariff of s will achieve this. tons of limes. in revenue for the Guatemalan government. per ton

4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of limes in Guatemala. The world price (Pw) of limes is $800 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of limes and that there are no transportation or transaction costs associated with international trade in limes. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 1120 1080 1040 1000 140 880 840 600 760 720 Domestic Demand 1 1 1 Domestic Supply I I 0 50 100 150 200 250 300 350 400 450 QUANTITY (Tons of limes) A tariff set at this level would raise s Pw 500 ? If Guatemala is open to international trade in limes without any restrictions, it will import Suppose the Guatemalan government wants to reduce imports to exactly 200 tons of limes to help domestic producers. A tariff of s will achieve this. tons of limes. in revenue for the Guatemalan government. per ton

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter34: Globalization And Protectionism
Section: Chapter Questions
Problem 55P: Assume two countries, Thailand (T) and Japan (J), have one good: cameras. The demand (d) and supply...
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4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of limes in Guatemala. The world price (Pw) of limes is $800 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of limes and that there are no transportation or transaction costs associated with international trade in limes. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 1120 1080 1040 1000 140 880 640 600 760 720 Domestic Demand 1 1 1 Domestic Supply I I Pw 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Tons of limes) A tariff set at this level would raise s ? If Guatemala is open to international trade in limes without any restrictions, it will import Suppose the Guatemalan government wants to reduce imports to exactly 200 tons of limes to help domestic producers. A tariff of s will achieve this. tons of limes. in revenue for the Guatemalan government. per ton
Transcribed Image Text:4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of limes in Guatemala. The world price (Pw) of limes is $800 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of limes and that there are no transportation or transaction costs associated with international trade in limes. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. PRICE (Dollars per ton) 1120 1080 1040 1000 140 880 640 600 760 720 Domestic Demand 1 1 1 Domestic Supply I I Pw 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Tons of limes) A tariff set at this level would raise s ? If Guatemala is open to international trade in limes without any restrictions, it will import Suppose the Guatemalan government wants to reduce imports to exactly 200 tons of limes to help domestic producers. A tariff of s will achieve this. tons of limes. in revenue for the Guatemalan government. per ton
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