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The following graph shows the domestic supply of and demand for soybeans in Colombia. Colombia is open to international trade of soybeans without any restrictions. The world price (Pw) of soybeans is $535 per ton and is represented by the horizontal black line. Throughout this problem, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per ton) 940 895 850 805 760 715 670 625 580 535 490 + 1 1 || Supply Demand Pw W 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of tons of soybeans) Graph Input Tool Market for Soybeans in Colombia Price (Dollars per ton) Domestic Demand (Thousands of tons of soybeans) 850 20 Domestic Supply (Thousands of tons of soybeans) ? 80
If Colombia is open to international trade of soybeans without any restrictions, it will import the full value for your answer, accounting for the horizontal axis units.) Suppose the Colombian government wants to reduce imports to exactly 40,000 tons of soybeans to help domestic producers. A tariff of $ ton will achieve this. A tariff set at this level would raise $ tons of soybeans. (Note: Be sure to enter in revenue for the Colombian government. per
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