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The following graph shows the domestic supply of and demand for soybeans in Guatemala. Guatemala is open to international trade of soybeans without any restrictions. The world price (Pw) of soybeans is $525 per ton and is represented by the horizontal black line. Throughout this problem, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.

The following graph shows the domestic supply of and demand for soybeans in Guatemala. Guatemala is open to international trade of soybeans without any restrictions. The world price (Pw) of soybeans is $525 per ton and is represented by the horizontal black line. Throughout this problem, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.

Principles of Economics, 7th Edition (MindTap Course List)
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 8PA
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5. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in Guatemala. Guatemala is open to international trade of soybeans without any restrictions. The world price (Pw) of soybeans is $525 per ton and is represented by the horizontal black line. Throughout this problem, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per ton) 840 805 770 735 700 665 630 595 560 525 490 1 Supply + Demand PW 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of tons of soybeans) Graph Input Tool Market for Soybeans in Guatemala Price (Dollars per ton) Domestic Demand (Thousands of tons of soybeans) 770 100 Domestic Supply (Thousands of tons of soybeans) 400
Transcribed Image Text:5. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in Guatemala. Guatemala is open to international trade of soybeans without any restrictions. The world price (Pw) of soybeans is $525 per ton and is represented by the horizontal black line. Throughout this problem, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per ton) 840 805 770 735 700 665 630 595 560 525 490 1 Supply + Demand PW 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of tons of soybeans) Graph Input Tool Market for Soybeans in Guatemala Price (Dollars per ton) Domestic Demand (Thousands of tons of soybeans) 770 100 Domestic Supply (Thousands of tons of soybeans) 400
If Guatemala is open to international trade of soybeans without any restrictions, it will import enter the full value for your answer, accounting for the horizontal axis units.) Suppose the Guatemalan government wants to reduce imports to exactly 200,000 tons of soybeans to help domestic producers. A tariff of $ per ton will achieve this. A tariff set at this level would raise $ tons of soybeans. (Note: Be sure to in revenue for the Guatemalan government.
Transcribed Image Text:If Guatemala is open to international trade of soybeans without any restrictions, it will import enter the full value for your answer, accounting for the horizontal axis units.) Suppose the Guatemalan government wants to reduce imports to exactly 200,000 tons of soybeans to help domestic producers. A tariff of $ per ton will achieve this. A tariff set at this level would raise $ tons of soybeans. (Note: Be sure to in revenue for the Guatemalan government.
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