The following graph shows the domestic supply of and demand for soybeans in Vene

Question

The following graph shows the domestic supply of and demand for soybeans in Venezuela. The world price (P_W) of soybeans is $525 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 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. Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. If Venezuela is open to international trade of soybeans without any restrictions, it will import tons of soybeans. Suppose the Venezuelan government wants to reduce imports to exactly 100,000 tons of soybeans to help domestic producers. A tariff of per ton will achieve this. A tariff set at this level would raise in revenue for the Venezuelan government.

Explanation / Answer

GIVEN:
The world Price of Soyabean is given to be $525 per ton.
Market Price for Soyabean in Venezuela is also given to be $735 per ton.
Domestic Demand for Soyabean is given to be 100 ton and domestic suply for soyabean is given to be that of 400 ton.
NOTE: THE DATA GIVEN IN THE GRAPH CANNOT BE MODIFIED HERE ON THE WEBSITE. SO ASSUMING THE SAME DATA THE FOLLOWING ANSWER IS GIVEN.
Assuming that there is free trade and no transport or other costs, Venezuela will import soyabean upto 450 tons.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.