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The following graph shows the domestic demand for and supply of lemons in Burundi. The world price (Pw) of lemons is $245 per ton and
The following graph shows the domestic demand for and supply of lemons in Burundi. The world price (Pw) of lemons is $245 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 lemons and that there are no transportation or transaction costs associated with international trade in lemons. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 445 - Domestic Demand Domestic Supply 420 305 370 345 320 205 PRICE (Dollars per ton) 270 Pu 1 1 1 245 - 220 1 1 1 s L . . . 1 80 80 120 150 130 210 240 270 300 QUANTITY (Tons of lemons) If Burundi is open to international trade in lemons without any restrictions, it will import I:Itcms of lemons. Suppose the Burundian government wants to reduce imports to exactly 120 tons of lemons to help domestic producers. A tariff of per ton will achieve this. 445 Domestic Demand Domestic Supply 420 395 370 345 320 PRICE (Dollars per ton) 285 270 w 245 220 195 0 30 60 90 120 150 180 210 240 270 300 QUANTITY (Tons of lemons) If Burundi is open to international trade in lemons without any restrictions, it will import tons of lemons. Suppose the Burundian government wants to reduce imports to exactly 120 tons of lemons to help domestic producers. A tariff of $ per ton will achieve this. A tariff set at this level would raise $ in revenue for the Burundian government
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