the ending of problem questionComplete the following table to summarize your results from the previous two graphs. Under Free TradeUnder a Tariff(Dollars)(Dollars)Consumer Surplus Producer Surplus Government Revenue0 Based on your analysis, as a result of the tariff, Kenya’s consumer surplus by , producer surplus decrease or increase by , and the government collects $ in revenue. Therefore, the net welfare effect is an gain or loss of $. 3. Welfare effects of a tariff in a small countrySuppose Kenya is open to free trade in the world market for wheat. Because of Kenya's small size, the demand for and supply of wheat in Kenya donot affect the world price. The following graph shows the domestic wheat market in Kenya. The world price of wheat is Pw = $250 per ton.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).(?)Domestic DemandDomestic Supply490460Cs430400PS370340310280P..25022019020406080100120140160180200QUANTITY (Tons of wheat)If Kenya allows international trade in the market for wheat, it will importtons of wheat.Now suppose the Kenyan government decides to impose a tariff of $60 on each imported ton of wheat. After the tariff, the price Kenyan consumerspay for a ton of wheat is $and Kenya will importtons of wheat.PRICE (Dollars per ton) Show the effects of the $60 tariff on the following graph.Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surpluswith the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (squaresymbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areasrepresenting deadweight loss (DWL) caused by the tariff.Domestic Supply490Domestic Demand460World Price Plus Tariff430400cs370340310PS280P.250Government Revenue22019020406080 100120140180180200DWLQUANTITY (Tons of wheat)Complete the following table to summarize your results from the previous two graphs.Under Free TradeUnder a TariffPRICE (Dollars per ton)

The graph will be shown with the following information below: It will import 160-40 =120 tons…

Answered: the ending of problem question…

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 1PA

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the ending of problem question

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

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

Based on your analysis, as a result of the tariff, Kenya’s consumer surplus by

, producer surplus decrease or increase by

, and the government collects $

in revenue. Therefore, the net welfare effect is an gain or loss

of $

3. Welfare effects of a tariff in a small country
Suppose Kenya is open to free trade in the world market for wheat. Because of Kenya's small size, the demand for and supply of wheat in Kenya do
not affect the world price. The following graph shows the domestic wheat market in Kenya. The world price of wheat is Pw = $250 per ton.
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).
(?)
Domestic Demand
Domestic Supply
490
460
Cs
430
400
PS
370
340
310
280
P..
250
220
190
20
40
60
80
100
120
140
160
180
200
QUANTITY (Tons of wheat)
If Kenya allows international trade in the market for wheat, it will import
tons of wheat.
Now suppose the Kenyan government decides to impose a tariff of $60 on each imported ton of wheat. After the tariff, the price Kenyan consumers
pay for a ton of wheat is $
and Kenya will import
tons of wheat.
PRICE (Dollars per ton)

Show the effects of the $60 tariff on the following graph.
Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surplus
with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (square
symbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areas
representing deadweight loss (DWL) caused by the tariff.
Domestic Supply
490
Domestic Demand
460
World Price Plus Tariff
430
400
cs
370
340
310
PS
280
P.
250
Government Revenue
220
190
20
40
60
80 100
120
140
180
180
200
DWL
QUANTITY (Tons of wheat)
Complete the following table to summarize your results from the previous two graphs.
Under Free Trade
Under a Tariff
PRICE (Dollars per ton)

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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