4. Effects of a tariff on international trade 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) 1205 1160 1115 1070 1025 980 890 845 800 755 D Domestic Demand 160 200 QUANTITY (Tons of limes) 240 Domestic Supply A tariff set at this level would raise $ 360 P W ? 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 160 tons of limes to help domestic producers. A tariff of will achieve this. tons of limes. in revenue for the Bangladeshi government. per ton
4. Effects of a tariff on international trade 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) 1205 1160 1115 1070 1025 980 890 845 800 755 D Domestic Demand 160 200 QUANTITY (Tons of limes) 240 Domestic Supply A tariff set at this level would raise $ 360 P W ? 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 160 tons of limes to help domestic producers. A tariff of will achieve this. tons of limes. 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 8PA
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