SCENARIO: SUGAR TRADE IN BIRDONIA

question 32

Multiple Choice

SCENARIO: SUGAR TRADE IN BIRDONIA
In autarky, suppose that equilibrium sugar price is $100 per
Ton in Birdonia, a small agricultural nation.Now, suppose
Birdonia engages in free trade with the rest of the world.
The world price of sugar is $125 per ton.
Reference: Ref 10­1
(Scenario: Sugar Trade in Birdonia) What action must the
Government of Birdonia take to ensure that Birdonians do
Not import sugar at the world price of $125?

• A)It must place a $25 per ton tax on Birdonian sugar exports.
• B)It must levy a countervailing duty of $50 a ton on Birdonian sugar exports.
• C)It must agree to voluntarily restrain its exports to $125 per ton.
• D)It must levy a tariff of $50 per ton on imported sugar.

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