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The following graph shows the domestic demand for and supply of limes in Bangladesh. 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. 1120 Domestic Demand Domestic Supply SZ as per ton) 1060 1040 1000 960

The following graph shows the domestic demand for and supply of limes in Bangladesh. 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. 1120 Domestic Demand Domestic Supply SZ as per ton) 1060 1040 1000 960

Microeconomics
Microeconomics
13th Edition
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter20: International Trade
Section: Chapter Questions
Problem 11QP
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The following graph shows the domestic demand for and supply of limes in Bangladesh. 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) PRICE (Dollars per ton) 1120 1080 1040 1000 960 9:20 880 640 800 760 720 960 920 880 840 800 760 720 0 0 Domestic Demand 10 I 20 T I 10 20 Domestic Supply 70 60 50 30 40 QUANTITY (Tons of limes). 30 40 50 60 70 QUANTITY (Tons of limes) 80 A tariff set at this level would raise $ 80 90 100 PW 90 100 If Bangladesh is open to international trade in limes without any restrictions, it will import Suppose the Bangladeshi government wants to reduce imports to exactly 20 tons of limes to help domestic producers. A tariff of S achieve this. tons of limes. in revenue for the Bangladeshi government. per ton will
Transcribed Image Text:The following graph shows the domestic demand for and supply of limes in Bangladesh. 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) PRICE (Dollars per ton) 1120 1080 1040 1000 960 9:20 880 640 800 760 720 960 920 880 840 800 760 720 0 0 Domestic Demand 10 I 20 T I 10 20 Domestic Supply 70 60 50 30 40 QUANTITY (Tons of limes). 30 40 50 60 70 QUANTITY (Tons of limes) 80 A tariff set at this level would raise $ 80 90 100 PW 90 100 If Bangladesh is open to international trade in limes without any restrictions, it will import Suppose the Bangladeshi government wants to reduce imports to exactly 20 tons of limes to help domestic producers. A tariff of S achieve this. tons of limes. in revenue for the Bangladeshi government. per ton will
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