(Solved): 4. Effects of a tariff on international trade The following graph shows the domestic demand for and ...

4. Effects of a tariff on international trade The following graph shows the domestic demand for and supply of limes in Jordan. The world price (Pw) of limes is $\$770$ per ton and is displayed as a horizontal black line. Throughout the question, assume that all countries under consideration are small, that is, the amount demanded by any one country does not affect the world price of limes and that there are no transportation or transaction costs associated with international trade in limes. Also, assume that domestic suppliers wil satisfy domestic demand as much as possible before any exporting or importing takes place. If Jordan is open to international trade in limes without any restrictions, it will import tons of limes. Suppose the Jordanian government wants to reduce imports to exactly 60 tons of limes to help domestic producers. A tariff of achieve this. A tariff set at this level would raise in revenue for the Jordanian government.