9 . Effects of a tariff on international trade

The following graph shows the domestic supply of and demand for wheat in Bangladesh. Bangladesh is open to international trade of wheat without any restrictions. The world price (PWPW) of wheat is $270 per bushel 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 wheat and that there are no transportation or transaction costs associated with international trade in wheat. 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.

If Bangladesh is open to international trade of wheat without any restrictions, it will import

bushels of wheat. (Note: Be sure to enter the full value for your answer, accounting for the horizontal axis units.)

Suppose the Bangladeshi government wants to reduce imports to exactly 200,000 bushels of wheat to help domestic producers. A tariff of

per bushel will achieve this.

A tariff set at this level would raise

in revenue for the Bangladeshi government.

Graph Input Tool Market for Wheat in Bangladesh 495 470 Supply 395 445 Price (Dollars per bushel) Domestic Demand (Thousands of bushels of wheat) 200 300 420 Domestic Supply (Thousands of bushels of wheat) 395 PRICE (Dollars per bushel) 370 1 1 1 345 1 320 Demand 295 PW 270 245 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of bushels of wheat) bushels of wheat. (Note: Be sure to enter If Bangladesh is open to international trade of wheat without any restrictions, it will import the full value for your answer, accounting for the horizontal axis units.) Suppose the Bangladeshi government wants to reduce imports to exactly 200,000 bushels of wheat to help domestic producers. A tariff of $ per bushel will achieve this. A tariff set at this level would raise in revenue for the Bangladeshi government. Graph Input Tool Market for Wheat in Bangladesh 495 470 Supply 395 445 Price (Dollars per bushel) Domestic Demand (Thousands of bushels of wheat) 200 300 420 Domestic Supply (Thousands of bushels of wheat) 395 PRICE (Dollars per bushel) 370 1 1 1 345 1 320 Demand 295 PW 270 245 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of bushels of wheat) bushels of wheat. (Note: Be sure to enter If Bangladesh is open to international trade of wheat without any restrictions, it will import the full value for your answer, accounting for the horizontal axis units.) Suppose the Bangladeshi government wants to reduce imports to exactly 200,000 bushels of wheat to help domestic producers. A tariff of $ per bushel will achieve this. A tariff set at this level would raise in revenue for the Bangladeshi government