2800PRICE (Dollars per ton)240020001600120080040000II40K80 120 160 200 240 280 320 380QUANTITY (Thousands of tons)PW400Price with QuotaThe equivalent import tariff for Kazakhstan's grape import quota is $Change in PSQuota RentsDWLIn the previous graph, use the green area (triangle symbol) to shade the area that represents the effect of the quota on domestic producer surplus(PS) relative to domestic producer surplus under free trade. Use the tan quadrilateral (dash symbols) to shade the area that represents the quotarents. Finally, use the black areas (plus symbol) to indicate the deadweight loss (DWL) resulting from the quota's consumption and protective effects.per ton of grapes.If Kazakhstan's government auctions off the quota licenses in a well-organized, competitive auction, Kazakhstan experiences a deadweight loss of(Hint: Select a shaded region to see its area. Be sure to adjust for the units on the quantity axis.) 3. Import quotasKazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, whereSK is the supply curve and DK is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's governmentrestricts imports of grapes to 120,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan'swelfare.On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as astraight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) toindicate the new price of grapes with a quota of 120,000 grapes.4000PRICE (Dollars perton)380032002800240020001000120080000St80 120 160 200 240 200 320 360QUANTITY (Thousands of tons)PwSK+QPrice with QuotaAChange in PSQuota RentsDWL?

Deadweight loss is the cost that society has to bear because of the inefficiency of the market…

Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where SK is the supply curve and Dx is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 120,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 120,000 grapes. 4000 3000 PRICE (Dollars per ton) 3200+ 2400 - 2000 1000+ 800 0 0 St 120 QUANTITY (Thousands of tons) 200 320 400 SK+Q Price with Quota A Change in PS Quota Rents DWL ?

Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where SK is the supply curve and Dx is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 120,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 120,000 grapes. 4000 3000 PRICE (Dollars per ton) 3200+ 2400 - 2000 1000+ 800 0 0 St 120 QUANTITY (Thousands of tons) 200 320 400 SK+Q Price with Quota A Change in PS Quota Rents DWL ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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