Figure 19-7 Bragabong Currently Both Produces and Imports Almonds. the Almonds

question 8

Essay

Figure 19-7
Bragabong currently both produces and imports almonds. The government of Bragabong decides to restrict international trade in almonds by imposing a quota that allows imports of only 10 million kilos each year. Figure 19-7 shows the estimated demand and supply curves for almonds in Bragabong and the results of imposing the quota.
-Use Figure 19-7 to answer questions a-j.
a.If there is no quota what is the domestic price of almonds and what is the quantity of almonds demanded by consumers?
b.If there is no quota how many kilos of almonds would domestic producers supply and what quantity would be imported?
c.If there is no quota what is the dollar value of consumer surplus?
d.If there is no quota what is the dollar value of producer surplus received by producers in Bragabong?
e.If there is no quota what is the revenue received by foreign producers who supply almonds to Bragabong?
f.With a quota in place what is the price that consumers of Bragabong must now pay and what is the quantity demanded?
g.With a quota in place what is the dollar value of consumer surplus? Are consumers better off?
h.With a quota in place what is the dollar value of producer surplus received by producers in Bragabong? Are domestic producers better off?
i.Calculate the revenue to foreign producers who are granted permission to sell in Bragabong after the imposition of the quota.
j.Calculate the deadweight loss as a result of the quota.

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Definitions:

Trade-In Allowance

The amount credited to the buyer by the seller when the buyer trades in an old item towards the purchase of a new item.

Retain Or Replace

A decision-making process regarding whether to keep an existing asset or replace it with a new one, considering aspects such as costs, benefits, and performance.

Relevant Cost

Costs that should be considered when making a decision because they will affect the future and they differ among alternatives.

Old Equipment

Tangible assets previously used in operations, possibly obsolete or near the end of its useful life.