Q4. The supply S and demand D for sugar in US are:S = 3500 + 6.2PD = 10500 – 3.8Pwhere P is the price of sugar (in tons) and S and D are in thousand tons. The world price is 300$/ton. Assume that the US is a small country in the sugar market.(a) If there was free trade, how much sugar would the United States import from the rest of theworld? (b) The US puts a quota limiting imports of sugar to 2000 thousand tons. What is the domesticprice that prevail under this quota. What ad-valorem tariff would have led to the same levelof 2000 thousand tons of imports.(c) Draw a graph showing the sugar market in the US. Assume that the import licenses are freelydistributed to the importers. How much have consumer surplus and producer surplus changedcompared to the free trade? What is the net gain/cost to government? What is the net socialgain/loss of this intervention?(d) Knowing that there are about 12.000 workers in the sugar industry, what is the gain per workerfor the sugar industry? With 275 million customers in the US, what is the cost of the policy percustomer? Explain briefly the political economy of this policy, that is why it is implementeddespite its inefficiency.

we have Supply (S)=Q=3500+6.2P and Demand (D) = Q=10500-3.8P Here the equilibrium price is at the…

Q4. The supply S and demand D for sugar in US are: S = 3500 + 6.2P D = 10500 – 3.8P where P is the price of sugar (in tons) and S and D are in thousand tons. The world price is 300 $/ton. Assume that the US is a small country in the sugar market. (a) If there was free trade, how much sugar would the United States import from the rest of the world?

Q4. The supply S and demand D for sugar in US are: S = 3500 + 6.2P D = 10500 – 3.8P where P is the price of sugar (in tons) and S and D are in thousand tons. The world price is 300 $/ton. Assume that the US is a small country in the sugar market. (a) If there was free trade, how much sugar would the United States import from the rest of the world?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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