4. Effects of a tariff on international tradeThe following graph shows the domestic supply of and demand for oranges in Bangladesh. The world price (Pw) of oranges is $780 per ton and isrepresented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the worldprice of oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domesticsuppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.PRICE (Dollars per ton)1275 Domestic Demand122011651110105510009458908357807250 1020Domestic Supply3040 50 60 70QUANTITY (Tons of oranges)PWA tariff set at this level would raise80 90 100?If Bangladesh is open to international trade in oranges without any restrictions, it will importSuppose the Bangladeshi government wants to reduce imports to exactly 20 tons of oranges to help domestic producers. A tariff of Swill achieve this.80 tons of oranges.in revenue for the Bangladeshi government.per ton

Imports are the difference between domestic demand and domestic supply. In the graph, at the world…

If Bangladesh is open to international trade in oranges without any restrictions, it will import Suppose the Bangladeshi government wants to reduce imports to exactly 20 tons of oranges to help domestic producers. A tariff of S will achieve this. A tariff set at this level would raise 80 tons of oranges. in revenue for the Bangladeshi government. per ton

If Bangladesh is open to international trade in oranges without any restrictions, it will import Suppose the Bangladeshi government wants to reduce imports to exactly 20 tons of oranges to help domestic producers. A tariff of S will achieve this. A tariff set at this level would raise 80 tons of oranges. in revenue for the Bangladeshi government. per ton

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 2QCMC

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Question

4. Effects of a tariff on international trade
The following graph shows the domestic supply of and demand for oranges in Bangladesh. The world price (Pw) of oranges is $780 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 oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domestic
suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.
PRICE (Dollars per ton)
1275 Domestic Demand
1220
1165
1110
1055
1000
945
890
835
780
725
0 10
20
Domestic Supply
30
40 50 60 70
QUANTITY (Tons of oranges)
PW
A tariff set at this level would raise
80 90 100
?
If Bangladesh is open to international trade in oranges without any restrictions, it will import
Suppose the Bangladeshi government wants to reduce imports to exactly 20 tons of oranges to help domestic producers. A tariff of S
will achieve this.
80 tons of oranges.
in revenue for the Bangladeshi government.
per ton

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