4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for wheat in Bangladesh. The world price (Pw) of wheat is $270 per bushel and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the wor price of wheat and that there are no transportation or transaction costs associated with international trade in wheat. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. ? 540 Domestic Demand Domestic Supply 510 480 450 420 390 360 330 300 270 240 PRICE (Dollars per bushel) P₁ W + 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bushels of wheat) 400 bushels of wheat. If Bangladesh is open to international trade in wheat without any restrictions, it will import Р Suppose the Bangladeshi government wants to reduce imports to exactly 200 bushels of wheat to help domestic producers. A tariff of bushel will achieve this. in revenue for the Bangladeshi government. A tariff set at this level would raise $
4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for wheat in Bangladesh. The world price (Pw) of wheat is $270 per bushel and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the wor price of wheat and that there are no transportation or transaction costs associated with international trade in wheat. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. ? 540 Domestic Demand Domestic Supply 510 480 450 420 390 360 330 300 270 240 PRICE (Dollars per bushel) P₁ W + 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bushels of wheat) 400 bushels of wheat. If Bangladesh is open to international trade in wheat without any restrictions, it will import Р Suppose the Bangladeshi government wants to reduce imports to exactly 200 bushels of wheat to help domestic producers. A tariff of bushel will achieve this. in revenue for the Bangladeshi government. A tariff set at this level would raise $
Principles of Macroeconomics (MindTap Course List)
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Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: Application: International Trade
Section: Chapter Questions
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Transcribed Image Text:4. Effects of a tariff on international trade
The following graph shows the domestic supply of and demand for wheat in Bangladesh. The world price (Pw) of wheat is $270 per bushel 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 wheat and that there are no transportation or transaction costs associated with international trade in wheat. Also, assume that domestic
suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.
540
Domestic Demand
Domestic Supply
510
480
450
420
390
360
330
300
270
240
PRICE (Dollars per bushel)
Pw
0
50
100 150 200 250 300 350 400 450 500
QUANTITY (Bushels of wheat)
400 bushels of wheat.
If Bangladesh is open to international trade in wheat without any restrictions, it will import
Suppose the Bangladeshi government wants to reduce imports to exactly 200 bushels of wheat to help domestic producers. A tariff of
bushel will achieve this.
A tariff set at this level would raise $
in revenue for the Bangladeshi government.
per
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