Suppose Burundi is open to free trade in the world market for oranges. Since Burundi is small relative to the international market, the demand for and supply of oranges in Burundi have no impact on the world price. The following graph shows the domestic market for oranges in Burundi. The world price of a ton of oranges is PW = $350. Complete the following table to summarize your results from the previous two graphs. With Free TradeWith a Tariff(Dollars)(Dollars)Consumer Surplus Producer Surplus Government Revenue0 PRICE (Dollars per ton)620590560530500470440410380350320Domestic Demand0 51015 20 25 30 35QUANTITY (Tons of oranges)Domestic SupplyConsumer SurplusProducer SurplusGovernment RevenueWith Free Trade(Dollars)0PW40 45 50World Price Plus TariffCSPSComplete the following table to summarize your results from the previous two graphs.With a Tariff(Dollars)Government RevenueDWL(?) Homework (Ch 09)3. Welfare effects of a tariff in a small countrySuppose Burundi open to free trade in the world market for oranges. Since Burundi is small relative to the international market, the demand for andsupply of oranges in Burundi have no impact on the world price. The following graph shows the domestic market for oranges in Burundi. The worldprice of a ton of oranges is Pw = $350.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).(?)PRICE (Dollars perton)620590560530500470440410380350320Domestic Demand0 510Domestic Supply15 20 25 30 35QUANTITY (Tons of oranges)40P.45WA501 1CSPSBecause Burundi participates in international trade in the market for oranges, it will importtons of oranges.Now suppose the Burundian government decides to impose a tariff of $60 on each imported ton of oranges. Under the tariff, the price Burundian

A tariff is described as a tax or duty that a government imposes on imported or exported goods.…

Answered: Suppose Burundi is open to free trade…

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 3PA

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Suppose Burundi is open to free trade in the world market for oranges. Since Burundi is small relative to the international market, the demand for and supply of oranges in Burundi have no impact on the world price. The following graph shows the domestic market for oranges in Burundi. The world price of a ton of oranges is PW = $350.

Complete the following table to summarize your results from the previous two graphs.

	With Free Trade	With a Tariff
(Dollars)	(Dollars)
Consumer Surplus
Producer Surplus
Government Revenue	0

PRICE (Dollars per ton)
620
590
560
530
500
470
440
410
380
350
320
Domestic Demand
0 5
10
15 20 25 30 35
QUANTITY (Tons of oranges)
Domestic Supply
Consumer Surplus
Producer Surplus
Government Revenue
With Free Trade
(Dollars)
0
P
W
40 45 50
World Price Plus Tariff
CS
PS
Complete the following table to summarize your results from the previous two graphs.
With a Tariff
(Dollars)
Government Revenue
DWL
(?)

Homework (Ch 09)
3. Welfare effects of a tariff in a small country
Suppose Burundi open to free trade in the world market for oranges. Since Burundi is small relative to the international market, the demand for and
supply of oranges in Burundi have no impact on the world price. The following graph shows the domestic market for oranges in Burundi. The world
price of a ton of oranges is Pw = $350.
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).
(?)
PRICE (Dollars perton)
620
590
560
530
500
470
440
410
380
350
320
Domestic Demand
0 5
10
Domestic Supply
15 20 25 30 35
QUANTITY (Tons of oranges)
40
P.
45
WA
50
1 1
CS
PS
Because Burundi participates in international trade in the market for oranges, it will import
tons of oranges.
Now suppose the Burundian government decides to impose a tariff of $60 on each imported ton of oranges. Under the tariff, the price Burundian

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

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