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

The answer is D. $25,140,000 in imports, $32,240,000 in exports

Edge 2021

Answer 2

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

Explanation:

Let x be the export worth and y be the import worth of Ireland.

Since, Balance trade = Export worth - Import worth

Then according to the question we have following equations :-

`0.12x+0.21y=9,148,200...............................(1) \\\\x-y=7,100,000.....................................(2)`

Multiplying equation (2) by 0.21, we get

`0.21x-0.21y=0.21*7,100,000 \\\\\Rightarrow0.21x-0.21y=1,491,000........................(3)`

Adding (1) and (3), we get

`0.21x+0.12x=9,148,200+1,491,000\\\\\Rightarrow0.33x=10639200\\\\\Rightarrow\ x=32,240,000`

Substituting value of x in (2), we get

`32,240,000-y=7,100,000\\\\\Rightarrow y=32,240,000-7,100,000\\\\\Rightarrow y=25,140,000`

Hence, Ireland's import worth is 25,140,000 and export worth = $32,240,000