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The following graph shows the domestic demand for and supply of oranges in Colombia. The world price (PW) of oranges is $545 per ton and
The following graph shows the domestic demand for and supply of oranges in Colombia. The world price (PW) of oranges is $545 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. PRICE (Dollars per ton) 825 790 755 720 685 650 615 580 545 510 -- Domestic Demand Domestic Supply QUANTITY (Tons of oranges) 9 If Colombia is open to international trade in oranges without any restrictions, it will import tons of oranges. Suppose the Colombian government wants to reduce imports to exactly 40 tons of oranges to help domestic producers. A tariff of l:] per ton will achieve this. A tariff set at this level would raise |:] in revenue for the Colombian government
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