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The following graph shows the domestic supply of and demand for oranges in Jordan. The world price (PW) of oranges is $770 per ton and
The following graph shows the domestic supply of and demand for oranges in Jordan. The world price (PW) of oranges is $770 per ton and is represented by the horizontal black line. Throughout the question, assume that 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. 1175 -- Domestic Demand Domestic Supply 1130 1085 1040 995 950 905 PRICE (Dollars per ton) 860 815 770 + I I I | | l l l l l I i 0 40 80 120 160 200 240 280 320 360 400 QUANTITY (Tons of oranges) If Jordan is open to international trade in oranges without any restrictions, it will import tons of oranges. Suppose the Jordanian government wants to reduce imports to exactly 160 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 Jordanian government
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