4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in Venezuela. The world price (Pw ) of soybeans is $530 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 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. ? 890 Domestic Demand Domestic Supply 845 800 755 710 685 PRICE (Dollars per ton) 6:20 575 530 485 440 30 120 150 180 210 240 270 300 QUANTITY (Tons of soybeans) If Venezuela is open to international trade in soybeans without any restrictions, it will import tons of soybeans. Suppose the Venezuelan government wants to reduce imports to exactly 60 tons of soybeans to help domestic producers. A tariff of S | per ton will achieve this. A tariff set at this level would raise [ S in revenue for the Venezuelan government. Grade It Now Save & Continue Continue without saving