Figure 51 Illustrates the Steel Market for Mexico, Assumed to Be

question 154

Multiple Choice

Figure 5.1 illustrates the steel market for Mexico, assumed to be a "small" country that is unable to affect the world price. Suppose the world price of steel is given and constant at $200 per ton. Now suppose the Mexican steel industry is able to obtain trade protection.
Figure 5.1. Alternative Nontariff Trade Barriers Levied by a "Small" Country
-Referring to Figure 5.1, suppose the Mexican government imposes an import quota equal to 2 tons of steel.If foreign exporters behave as monopoly sellers, and Mexican importers behave as competitive buyers, the overall welfare loss of the quota to Mexico equals

• A) $200.
• B) $400.
• C) $600.
• D) $800.

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