5. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for oranges in New Zealand. New Zealand is open to international trade of oranges without any restrictions. The world price (PW) of oranges is $800 per ton and is represented by the horizontal black line. 111roughout this problem, assume that the amount demanded by any one country does not affect the world price of oranges and that there are no transportation or transaction costs associated with international trade in oranges. 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 eld will change accordingly. Graph Input Tool 6') Market for Oranges in New Zealand 1250 1200 / Price SUPP'IV I {Dollars per ton) 115G + + Domestic Demand 30 Domestic Supply 240 E' 1100 I {Thousands of tons (Thousands 0 ans g | of oranges) of oranges) 3. 1050 | 1'3 I g 1000 + 8 l ._. 950 I LIJ g I m 900 I o. 850 w 800 750 0 3D 60 90 120 150 180 210 240 270 300 QUANTITY (Thousands of tons of oranges) If New Zealand is open to international trade of oranges without any restrictions, it will import :I tons of oranges. (Note: Be sure to enter the full value for your answer, accounting for the horizontal axis units.) Suppose the New Zealand government wanls to reduce imports to exactly 60,000 tons of oranges to help domestic producers. A tariff of- per ton will achieve this. A tariff set at this level would raise in revenue for the New Zealand government