Question

In: Economics

​ The following graph shows the domestic supply of and demand for maize in Bangladesh.

The following graph shows the domestic supply of and demand for maize in Bangladesh. The world price (Pw) of maize is $260 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. 

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If Bangladesh is open to international trade in maize without any restrictions, it will import _______  tons of maize. 

Suppose the Bangladeshi government wants to reduce imports to exactly 100 tons of maize to help domestic producers. A tariff of $_______ per ton  will achieve this. 

A tariff set at this level would raises _______  in revenue for the Bangladeshi government.

Solutions

Expert Solution

It will import 300 units

A tariff of 300-260= 40 per ton will achieve this.

Revenue = 40*100= 4000

Rahul Sunny answered 2 years ago
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