Show transcribed image text 3. Welfare effects of a tariff in a small country Suppose Panama open to 1 answer below »

Show transcribed image text 3. Welfare effects of a tariff in a small country Suppose Panama open to free trade in the world market for maize. Because of Panamas steal size, the demand for and supply of maize in Panama do not affect the world price. The following graph shows the domestic maize market in Panama. The world price of maize is pW = $350 per ton. If Panama allows international trade in the market for maize, it will import _________ tons of maize. Now suppose the Panamanian government decides to impose a tariff of $40 on each imported ton of maize. After the tariff, the price Panamanian consumers pay for a ton of maize is [ ] , and Panama will report ________ tons of maize. Show the effects of the $40 tariff on the following graph.

 

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