A small open economy has demand for goat cheese given by P = 20 - 0.5Q and supply given by P = Q - 4. Goat cheese is traded around the world at a price of $4 per tonne. Suppose that the government imposes a quota of 13 tonnes on goat cheese. How will consumer surplus be affected, relative to the free trade scenario?

A small open economy has demand for goat cheese given by P = 20 - 0.5Q and supply given by P = Q - 4. Goat cheese is traded around the world at a price of $4 per tonne. Suppose that the government imposes a quota of 13 tonnes on goat cheese. How will consumer surplus be affected, relative to the free trade scenario?

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter21: International Trade And Comparative Advantage

Section: Chapter Questions

Problem 2TY

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