Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help Suppose Zambia is open to free trade in the world market for soybeans. Since Zambia is small relative to the international market, the
please help
Suppose Zambia is open to free trade in the world market for soybeans. Since Zambia is small relative to the international market, the demand for and supply of soybeans in Zambia have no impact on the world price. The following graph shows the domestic market for soybeans in Zambia. The world price of a ton of soybeans is Pw = $250. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). 480 Domestic Demand Domestic Supply- 430 CS 400 370 PS 340 310 PRICE (Dollars per ton) 280 250 220 190 180 25 50 75 100 125 150 175 200 225 250 QUANTITY (Tons of soybeans)Because Zambia participates in international trade in the market for soybeans, it will import tons of soybeans. Now suppose the Zambian government decides to impose a tariff of $30 on each imported ton of soybeans. Under the tariff, the price Zambian consumers pay for a ton of soybeans becomes $ , and Zambia will import tons of soybeans. Use the following graph to show the effects of the $30 tariff. Use the black line (plus symbol) to indicate the world price plus the tariff. Then, use the green points (triangle symbols) to show the consumer surplus with the tariff and the purple triangle (diamond symbols) to show the producer surplus with the tariff. Lastly, use the orange quadrilateral (square symbols) to shade the area representing government revenue received from the tariff and the tan points (rectangle symbols) to shade the areas representing deadweight loss (DWL) caused by the tariff. 480 Domestic Demand Domestic Supply 430 World Price Plus Tariff 400 370 340 CS 310 PRICE (Dollars per ton) 280 250 220 Government Revenue 190 180 25 50 75 100 125 150 175 200 225 250 DWL QUANTITY (Tons of soybeans)Complete the following table to summarize your results from the previous two graphs. with Free Trade Wilt 3 Tariff {Dollars} (Dollars) Consumer Surplus Producer Surplus Government Revenue Based on your analysis. as a result of the tariff, Zambia's consumer surplus by E. . producer surplus by E. , and the government collects ' in revenue. 111erefore, the net welfare effect is aStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started