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The following graph shows the domestic demand for and supply of oranges in Honduras. The world price (PW) of Olanges is $550 per ton and
The following graph shows the domestic demand for and supply of oranges in Honduras. The world price (PW) of Olanges is $550 per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, 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. 865 Domestic Demand Domestic Supply 830 795 760 725 690 PRICE (Dollars per ton) 655 620 585 P. 550 515 0 40 80 120 160 200 240 280 320 360 400 QUANTITY (Tons of oranges)If Honduras is open to international trade in oranges without any restrictions, it will import |:|tons of oranges. Suppose the Honduran government wants to reduce imports to exactly 80 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 Honduran government
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