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?

Answer 1

Answer:

Import= 17,040,000 ; Export=22,550,000

Explanation:

As we know that

Balance of trade = export - import

Let us assume that export be E

And, the import be I

So,  

Balance of trade =  E - I

$5,510,000 =  E - I

E =  5,510,000 + I

Now if we place the equation into the export or import tariffs so 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 - $44,000

0.21I = $3,578,400

I = 17,040,000

So,

The export is

E = $5,510,000 + I

E = $5,510,000 + $17,040,000

E = $22,550,000