Effects of a tariff on international trade
The following graph shows the domestic supply of and demand for wheat in Bolivia. Bolivia is open to international trade of wheat without any restrictions. The world price (Pw) of wheat is $260 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.
5. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for wheat in Bolivia. Bolivia is open to international trade of wheat without any restrictions. The world price (w) of wheat is $260 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. Graph Input Tool (?) Market for Wheat in Bolivia Supply Price 410 (Dollars per bushel) Domestic Demand 150 Domestic Supply 350 Thousands of (Thousands of bushels of wheat) bushels of wheat) PRICE (Dollars per bushel) Demand PW 235 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of bushels of wheat) If Bolivia 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.)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 (? ) 485 Market for Wheat in Bolivia 480 Supply Price 410 (Dollars per bushel) Domestic Demand 150 Domestic Supply 350 (Thousands of (Thousands of bushels of wheat) bushels of wheat, PRICE (Dollars per bushel) Demand 260 235 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of bushels of wheat) If Bolivia 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 Bolivian 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 Bolivian government. Grade It Now Save & Continue
