The Figure Given Below Shows the Market for MP3 Players

question 55

Multiple Choice

The figure given below shows the market for MP3 players in a small country. D_d and S_d are the domestic demand and domestic supply curves of the MP3 players before the imposition of the quota. (S_d + Q_Q) is the total available domestic supply curve after the quota has been imposed. According to the figure, if import licenses are allocated based on a resource-using procedure, the loss to the economy will be:

• A)$35 million.
• B)less than $10 million.
• C)greater than $35 million.
• D)$25 million.

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