Question

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?
a.
$30,916,923 in imports, $50,240,000 in exports
b.
$17,040,000 in imports, $22,550,000 in exports
c.
$6,226,300 in imports, $5,950,800 in exports
d.
$4,793,700 in imports, $5,069,200 in exports


Please select the best answer from the choices provided

A
B
C
D

Answer 1

B

Let imports = M and exports = X. Then
X - M = 5,510,000
0.13M + 0.08X = 4,019,200

Substitute X = M + 5,510,000 into the second:
0.13M + 0.08(M + 5,510,000) = 4,019,200
0.21M = 3,578,400 → M = 17,040,000
X = 17,040,000 + 5,510,000 = 22,550,000.