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The following graph shows the domestic supply of and demand for maize in Guatemala. The world price (Pw) of maize is $240 per ton and
The following graph shows the domestic supply of and demand for maize in Guatemala. 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 PRICE (Dollars per ton) 320 300 280 260 240 220 10 20 30 40 50 60 70 80 90 100 QUANTITY (Tons of maize) If Guatemala is open to international trade in maize without any restrictions, it will import tons of maize. Suppose the Guatemalan government wants to reduce imports to exactly 40 tons of maize to help domestic producers. A tariff of $ per ton will achieve this. A tariff set at this level would raise s in revenue for the Guatemalan government
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