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4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for oranges in Guatemala. The world price (Pw) of oranges is $800 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 oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 1295Domestic Demand Domestic Supply 240 1185 130 1075 1020 ш965 or 910 855 800 745 0 40 10 200 240 280 320 30 400 QUANTITY (Tons of oranges)

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