Questions Suppose foreign pharmaceutical distributors from Zargadee are currently prohibited from selling drugs in the U.S. Assume that foreign drugs are identical to drugs produced domestically. Suppose that the U.S. does not import drugs produced in Zargadee from any other country. a. Use supply and demand analysis to show how the exclusion of imported drugs from Zargadee affects the equilibrium price and quantity of drugs in the U.S. market. b. How much does the quantity of drug imports decrease as a result of the regulation? Explain using your graph. c. According to the article, are consumers in favor of drug importation from Zargadee? Explain using your graph. d. According to the article, are U.S. drug producers in favor of drug importation from Zargadee? Explain using your graph. e. If Congress wanted to maximize total surplus, should it allow importation or not? Explain using your graph. f. If drugs from Zargadee were not identical to other drugs, briefly describe how that difference would be a problem for your analysis.

ENGR.ECONOMIC ANALYSIS
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Suppose foreign pharmaceutical distributors from Zargadee are currently prohibited from selling
drugs in the U.S. Assume that foreign drugs are identical to drugs produced domestically.
Suppose that the U.S. does not import drugs produced in Zargadee from any other country.
a. Use supply and demand analysis to show how the exclusion of imported drugs from Zargadee
affects the equilibrium price and quantity of drugs in the U.S. market.
b. How much does the quantity of drug imports decrease as a result of the regulation? Explain
using your graph.
c. According to the article, are consumers in favor of drug importation from Zargadee? Explain
using your graph.
d. According to the article, are U.S. drug producers in favor of drug importation from Zargadee?
Explain using your graph.
e. If Congress wanted to maximize total surplus, should it allow importation or not? Explain
using your graph.
f. If drugs from Zargadee were not identical to other drugs, briefly describe how that difference
would be a problem for your analysis.
Transcribed Image Text:Questions Suppose foreign pharmaceutical distributors from Zargadee are currently prohibited from selling drugs in the U.S. Assume that foreign drugs are identical to drugs produced domestically. Suppose that the U.S. does not import drugs produced in Zargadee from any other country. a. Use supply and demand analysis to show how the exclusion of imported drugs from Zargadee affects the equilibrium price and quantity of drugs in the U.S. market. b. How much does the quantity of drug imports decrease as a result of the regulation? Explain using your graph. c. According to the article, are consumers in favor of drug importation from Zargadee? Explain using your graph. d. According to the article, are U.S. drug producers in favor of drug importation from Zargadee? Explain using your graph. e. If Congress wanted to maximize total surplus, should it allow importation or not? Explain using your graph. f. If drugs from Zargadee were not identical to other drugs, briefly describe how that difference would be a problem for your analysis.
Expert Solution
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Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and specify the other subparts (up to 3) you’d like answered.

For simplicity, we assume there are just two countries. The US and Zargadee. The US is the importing nation.

We use the following graph to build up the explanation: 

Economics homework question answer, step 1, image 1

In the above figure,

DD is the domestic demand curve

DS is the domestic supply curve 

In a free trade scenario, P* is the free trade price and the excess demand over domestic supply at the free trade price would have been the import quantity of drugs by the US shown by the green line.

 

 

 

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