6. Supply and demand are given D = 200-20P and S=20P 40. Currently the government allows a Free Trade policy at a world price of $3. a. Provide a labelled Supply and Demand Diagram along with supplementary calculations to assess how the introduction of an Import Quota of 40 units will affect Consumer Surplus, Producer Surplus, Licensee Surplus and Total Surplus. b. On your diagram illustrate how the gains from trade would increase if demand was more elastic. Provide numbers for A = that would make the demand curve D = A - BP more elastic and B = than D = 200 - 20P.

6. Supply and demand are given D = 200-20P and S=20P 40. Currently the government allows a Free Trade policy at a world price of $3. a. Provide a labelled Supply and Demand Diagram along with supplementary calculations to assess how the introduction of an Import Quota of 40 units will affect Consumer Surplus, Producer Surplus, Licensee Surplus and Total Surplus. b. On your diagram illustrate how the gains from trade would increase if demand was more elastic. Provide numbers for A = that would make the demand curve D = A - BP more elastic and B = than D = 200 - 20P.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 3CQQ

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Question

6. Supply and demand are given D = 200-20P and S=20P-40. Currently the government allows a Free Trade
policy at a world price of $3.
a.
Provide a labelled Supply and Demand Diagram along with supplementary calculations to assess how the
introduction of an Import Quota of 40 units will affect Consumer Surplus, Producer Surplus, Licensee
Surplus and Total Surplus.
b.
On your diagram illustrate how the gains from trade would increase if demand was more elastic. Provide
numbers for A =
and B =
that would make the demand curve D = A - BP more elastic
than D 200 - 20P.

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