4. Effects of a tariff on international trade The following graph shows the domestic supply of...

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4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for wheat in Kenya. The world price (Pw) of wheat is $255 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 satisty domestic demand as much as possible before any exporting or importing takes place. 480 Domestic Demand Domestic Supply 455 430 405 380 355 330 305 280 255 230 50 100 150 200 250 300 350 400 450 s00 QUANTITY (Bushels of wheat) PRICE (Dollars per bushei) If Kenya is open to international trade in wheat without any restrictions, it will import bushels of wheat. Suppose the Kenyan government wants to reduce imports to exactly 100 bushels of wheat to help domestic producers. A tariff of per bush will achieve this. A tariff set at this level would raise s in revenue for the Kenyan government. 4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for wheat in Kenya. The world price (Pw) of wheat is $255 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 satisty domestic demand as much as possible before any exporting or importing takes place. 480 Domestic Demand Domestic Supply 455 430 405 380 355 330 305 280 255 230 50 100 150 200 250 300 350 400 450 s00 QUANTITY (Bushels of wheat) PRICE (Dollars per bushei) If Kenya is open to international trade in wheat without any restrictions, it will import bushels of wheat. Suppose the Kenyan government wants to reduce imports to exactly 100 bushels of wheat to help domestic producers. A tariff of per bush will achieve this. A tariff set at this level would raise s in revenue for the Kenyan government.

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Domestic Demand Domestic Supply 415 395 375 356 335 31... View the full answer