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PACKAGES DESIGNED W?T Secure https//ng.cengage.com/static/ 8336348nbNodeld 3208605268kdeploymentld 5673665667431414926990 MINDTAP omework (Ch 09) Due on jul 4 at 11:59 PM EDT Back to Assignment Attempts: Average:3 4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for maize in Bangladesh. The world price (Pw) of maize is $270 per ton 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 maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers wil satisfy domestic demand as much as possible before any exporting or importing takes place. 540 Domestic Demand Domestic Supply F7 FB F F10 F11 F12 PrtSer Esc F F2 F3 F4 FSExplanation / Answer
a. It will import = 270 - 30 = 240 tons of maize
b. The price must be raised to 360. When Price = 360, Qs = 120 and Qd = 180 i.e. a shortage of 60 (= 180-120) must be imported.
The tariff = New price - Old price = 360 -270 = $90 per ton.
c. This tariff will raise revenue = $90*60 = $5400 for Bangladeshi govt.
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