Suppose that Lebanon has placed tariffs on its imports and exports. The import tariff is 13%, and the export tariff is 8%. If Lebanon has a balance of trade of (equivalent US dollars) $5,510,000 and received tariff revenue of $4,019,200, what are its imports and exports worth? its not A and i need it fast please
Accepted Solution
A:
Answer: Import= 17,040,000 ; Export=22,550,000
The balance of trade is calculated by subtracting the export with the import. Let say I= import and E= export. You can get this equation:
balance of trade= E-I 5,510,000= E-I E= 5,510,000+I
If you put the equation into the export/import tariffs it would be: 0.13* I + 0.08*E= 4,019,200 0.13* I + 0.08*(5,510,000+I)= 4,019,200 0.13I + 0.08I + 440,800= 4,019,200 0.21I = 4,019,200- 440,00 0.21I= 3,578,400 I= 17,040,000
The export would be: E= 5,510,000+I E= 5,510,000+17,040,000 E= 22,550,000