The following graph shows the domestic supply of and demand for wheat in Kenya. 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.

If Kenya is open to international trade in wheat without any restrictions, it will import _____________bushels or wheat.
Suppose the Kenyan government wants to reduce imports to exactly 100 bushels of wheat to help domestic producers. A tariff of ________ per bushed will achieve this.
A tariff set at this level would raise ____________ in revenue for the Kenyan government.

Transcribed Image Text:

445 Domestic Demand Domestic Supply 420 395 370 345 320 295 270 245 220 195 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bushels of whheat) PRICE (Dollars per bushel)