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The following graph shows the domestic supply of and demand for maize in Burundi. The world price (PW) of maize is $240 per ton and
The following graph shows the domestic supply of and demand for maize in Burundi. The world price (PW) of maize is $240 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 maize and that there are no transportation or transaction costs associated with international trade in maize. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 420 Domestic Demand Domestic Supply 400 380 -- 380 340 -- 320 300 -- PRICE (Dollars per ton) 280 260 -- 240 -+ /.K 0 40 80 120 160 200 240 280 320 360 400 QUANTITY (Tons of maize) If Burundi is open to international trade in maize without any restrictions, it will import: tons of maize. Suppose the Burundian government wants to reduce imports to exactly 160 tons of maize to help domestic producers. A tariff of achieve this. A tariff set at this level would raise in revenue for the Burundian government. $ per ton will
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