DIRECTIONS for questions: Read the information given below and answer the question that follows.

Five countries engage in trade with each other. Each country levies import tariffs on the other countries. The import tariff levied by Country X on Country Y is calculated by multiplying the corresponding tariff percentage with the total imports of Country X from Country Y.

The radar chart below depicts different import tariff percentages charged by each of the five countries on the others. For example, US (the blue line in the chart) charges 20%, 40%, 30%, and 30% import tariff percentages on imports from France, India, Japan, and UK, respectively. The bar chart depicts the import tariffs levied by each county on other countries. For example, US charged import tariff of 3 billion USD on UK.

                                                                              

                                                                           

Assume that imports from one country to another equals the exports from the latter to the former.

The trade surplus of Country X with Country Y is defined as follows. Trade surplus = Exports from Country X to Country Y – Imports to Country X from Country Y.

A negative trade surplus is called trade deficit.

What is the trade surplus/trade deficit of India with UK?

The correct answer is Deficit of 15.0 Billion USD.

To determine the trade surplus or deficit of India with the UK, we must calculate the value of India's exports to the UK and India's imports from the UK. The problem states that imports from one country to another equal the exports from the latter to the former. Therefore, India's exports to the UK are equal to the UK's imports from India.

The formula for the import tariff is given as:
Import tariff levied by Country X on Country Y = Tariff percentage × Total imports of Country X from Country Y.
We can rearrange this formula to find the total imports:
Total imports of Country X from Country Y = Import tariff levied by Country X on Country Y / Tariff percentage.

First, let us calculate the UK's imports from India (which equals India's exports to the UK). Based on the provided bar chart, the import tariff levied by the UK on India is 2 Billion USD. According to the radar chart, the tariff percentage levied by the UK on India is 40% (or 0.40). Using the formula:

$\text{UK's imports from India}=\frac{2}{0.40}=5\text{Billion USD}$

Next, let us calculate India's imports from the UK. From the bar chart, the import tariff levied by India on the UK is 4 Billion USD. From the radar chart, the tariff percentage levied by India on the UK is 20% (or 0.20). Using the formula:

$\text{India's imports from the UK}=\frac{4}{0.20}=20\text{Billion USD}$

Finally, we calculate the trade surplus of India with the UK using the provided formula:
Trade surplus = Exports from India to the UK − Imports to India from the UK.

$\text{Trade surplus}=5-20=-15\text{Billion USD}$

Since a negative trade surplus indicates a trade deficit, India has a trade deficit of 15.0 Billion USD with the UK. This confirms the correct option.