Figure 9-9 Bragabong Currently Both Produces and Imports Almonds

question 181

Essay

Figure 9-9 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 9-9 shows the estimated demand and supply curves for almonds in Bragabong and the results of imposing the quota.
-Use Figure 9-9 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:

Total Asset Turnover

An analysis ratio that evaluates the effectiveness of a corporation's assets in producing sales turnover.

Liquidity Ratio

Financial metrics used to assess a company's ability to meet its short-term obligations using its most liquid assets.

Net Working Capital Turnover

A ratio that measures how effectively a company uses its net working capital to generate sales.

Sales

The total revenue a company earns from selling goods or services over a specific period.