Answer Happy

4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for wheat in Bangladesh. The world price (Pw) of wheat is $245 per bushel 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 wheat and that there are no transportation or transaction costs associated with international trade in wheat. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. (?) 405 Domestic Demand Domestic Supply 385 365 345 PRICE (Dollars per bushel) 265 245 225 205 P.. W I ■ " 0 50 400 450 500 150 200 250 300 350 QUANTITY (Bushels of wheat) If Bangladesh is open to international trade in wheat without any restrictions, it will import + I T 1 100 300 bushels of wheat.
PRICE (Dollars per bushel) 405 385 365 345 325 285 265 245 225 205 Domestic Demand Domestic Supply S P W I 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bushels of wheat) If Bangladesh is open to international trade in wheat without any restrictions, it will import 300 bushels of wheat. per Suppose the Bangladeshi government wants to reduce imports to exactly 200 bushels of wheat to help domestic producers. A tariff of S bushel will achieve this. A tariff set at this level would raise $ in revenue for the Bangladeshi government.