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4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of lemons in Guatemala. The world price

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4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of lemons in Guatemala. The world price (P w ) of lemans is $2.45 per ton and is. displayed as a horizontal black line. Throughout the question, assume that all countries under considerabion are small, that is, the amount demanded by any one country does not affect the world price of lemons and that there are no transportation or transaction costs associated with internationat trade in lemons. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. If Guatemala is open to international trade in lemons without any restrictions, it will import tons of lemons. Suppose the Guatemalan government wants to reduce imports to exactly 60 tons of lemons to help demestic producers. A tariff of will achieve this. A tariff set at this level would raise in revenue for the Guatemalan government

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