Suppose Guatemala is open to free trade in the world market for soybeans. Because of Guatemala's small size, the demand for and supply of soybeans in Guatemala do not affect the world price. The following graph shows the domestic soybeans market in Guatemala. The world price of soybeans isP

W

=$400

PW=$400per ton. Throughout this problem, assume that changes in trade policies in other nations do not significantly affect the world market for soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also assume that domestic supplies will satisfy domestic demand as much as possible before any exporting or importing takes place.

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 domestic producer surplus (PS).

Complete the following table to summarize your results from the previous two graphs.

Based on your analysis, as a result of the tariff, Guatemala's consumer surplus_____ by $__________, and producer surplus____ by $__________. Taking into account how much revenue the tariff generates for the government, the net welfare effect is a______ of $_________.

CENGAGE | MINDTAP Search this course Homework (Ch 04) X Back to Assignment Attempts Average / 6 6. Effects of a tariff in a small nation Suppose Guatemala is open to free trade in the a's small size, the demand for and supply of soybeans in Guatemala do not affect the world price. soybeans market in Guatemala. The world price of soybeans is Pw = $400 per ton. Throughout this s in trade policies in other nations do not significantly affect the world market for soybeans and that there ternational trade in soybeans. Also assume that domestic supplies will satisfy domestic de