Question

Suppose that Ireland has placed a tariff of 12% on its exports and a tariff of 21% on its imports. If Ireland has tariff revenue worth (equivalent US dollars) $9,148,200 and a balance of trade of $7,100,000, what are its exports and imports worth?
a.
$950,416 in imports, $8,050,416 in exports
b.
$3,145,984 in imports, $10,245,984 in exports
c.
$1,921,122 in imports, $9,021,122 in exports
d.
$25,140,000 in imports, $32,240,000 in exports

Answer 1

Let exports = X and imports = M. Then
0.12X + 0.21M = 9,148,200 (tariff revenue)
X − M = 7,100,000 (balance of trade).

From X = M + 7,100,000, substitute:
0.12(M + 7,100,000) + 0.21M = 9,148,200
0.33M + 852,000 = 9,148,200
0.33M = 8,296,200 → M = 25,140,000
X = M + 7,100,000 = 32,240,000.

Answer: d. $25,140,000 in imports, $32,240,000 in exports.