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4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in VenIf Venezuela is open to international trade in soybeans without any restrictions, it will import 320 tons of soybeans. $615 p

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Ans: If Venezuela is open to international trade in soybeans without any restriction , it will import 320 tons of soybeans.

Ans: Suppose the Venezuelan government wants to reduce imports to exactly 160 tons of soybeans to help domestic producers. A tariff of $70 per ton will achieve this.

Explanation:

World price = $545

After imposition of tariff of $70 per ton , the new price will be ; $545 + $70 = $615

At the new price ( $615 ) , total import quantity = 280 - 120 = 160 tons

Ans: A tariff set at this level would raise $11200 in revenue for the Venezuelan government.

Explanation:

Total revenue raised from tariff = Tariff per ton * Total imported quantities

= $70 * 160

=$11200

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