4.00Question

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 $550 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. Graph Input Tool (?) 910 Market for Soybeans in Guatemala Supply Price (Dollars per ton) 750 PRICE (Dollars per ton) Domestic Demand Thousands of tons 200 Domestic Supply (Thousands of tons 300 of soybeans) of soybeans) Demand FW 50 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of tons of soybeans) If Guatemala is open to international trade of soybeans without any restrictions, it will import tons of soybeans. (Note: Be sure to 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 $ n revenue for the Guatemalan government