Example 9.5 describes the effects of the sugar quota. The supply equation is Qs = -7.48+0.84P, and the demand equation is Qp = 26.7 -0.23P, where the price is in cents and quantities are in billions of pounds. The world price is 12 cents per pound. In 2005, imports were limited to 5.3 billion pounds, which pushed the domestic price to 27 cents per pound. Suppose imports were expanded to 10 billion pounds. a. What would be the new U.S. domestic price? (Round your response to two decimal places.) The new domestic price is 22.6 cents. b. How much would consumers gain and domestic producers lose? (Round your responses to two decimal places.) Consumers would gain $ million in consumer surplus. Producers would lose $ million in producer surplus.

Example 9.5 describes the effects of the sugar quota. The supply equation is Qs = -7.48+0.84P, and the demand equation is Qp = 26.7 -0.23P, where the price is in cents and quantities are in billions of pounds. The world price is 12 cents per pound. In 2005, imports were limited to 5.3 billion pounds, which pushed the domestic price to 27 cents per pound. Suppose imports were expanded to 10 billion pounds. a. What would be the new U.S. domestic price? (Round your response to two decimal places.) The new domestic price is 22.6 cents. b. How much would consumers gain and domestic producers lose? (Round your responses to two decimal places.) Consumers would gain $ million in consumer surplus. Producers would lose $ million in producer surplus.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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