The Figure Given Below Shows the Domestic Demand (D_d) and Supply

question 29

Multiple Choice

The figure given below shows the domestic demand (D_d) and supply (S_d) curves of mopeds in a country before an import quota is imposed by the government. After the imposition of quota, the total available supply curve becomes S_d + Q_Q. After the quota is imposed by the government, the domestic producers:

• A)lose $2.5 million.
• B)gain $27.5 million.
• C)gain $42.5 million.
• D)lose $80 million.

---

Definitions:

Break-Even Quantity

The number of units that must be sold for total revenues to equal total costs, resulting in no profit or loss.

Fixed Costs

Business expenses that remain constant regardless of the level of production or sales activities.

Marginal Cost

The additional cost incurred by producing one more unit of a particular good or service.

Sunk Cost

Expenses that have already been incurred and cannot be recovered, which should not influence future business decisions.