Price $40 $30 $20 0,000 24,000 44 50,000 Assume the trade price equals $20. In t
ID: 1103267 • Letter: P
Question
Price $40 $30 $20 0,000 24,000 44 50,000 Assume the trade price equals $20. In this case, domestic production will equal a. 24,000 units b. 50,000 units c. 10,000 units d. 44,000 units With a trade price equal to $20, a. The country is running a capital account deficit b. The country is running a current account deficit c. The country is running a current account surplus d. The country's exports imports Assume a quota limits imports to 20,000 units a. The domestic price will equal $20 and domestic production will equal 10,000 units b. The domestic price will equal $30 and domestic production will equal 24,000 units c. The domestic price will equal $30 and domestic production will equal 44,000 units d. The domestic price will equal $40 and imports will fall to zero Assume a quota limits imports to 20,000 units. The area $(a bcd) equals a. The gain in producer surplus b. The loss of producer surplus c. The loss of consumer surplus d. The gain in consumer surplus Assume a quota limits imports to 20,000 units. If the government sells quotas sells licenses to importers. The area of government revenues is shown by a. The area $c b. The area $(atc) c. The area $(b+d d. The area $(a+b+c+d)Explanation / Answer
1) The answer is C-) 10,000 units.
because, at price $20, only 10,000 units is produced and supplied by domestic.
2) The answer is B-) The country has running a current account deficit.
because, when a trade price is $20, domestic supplied is onyl 10,000 units while the demand is 50,000 units. therefore, the country imports exceed exports. and thus country has running a current account deficit.
3) The answer is B -) The domestic price will equal to $30 and domestic production will equal to 24,000 units.
because, when the limits quota is only 20,000 units. then the supply will reduced and hence the price will increase in domestic. which therefore also decrease the quantity demanded. after all, the quantity demanded will only 44,000 units and supplied by domestic production is 24,000 units and the remaining units will be imported .
4) The answer is B-) The loss of consumer surplus.
because at $20, they consumer surplus is large because they are only paying $20. but after import quota , they have to pay more . therefore loss in consumer surplus.
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