Suppose that nation A is a small nation with demand and supply of commodity X given by Qd = 120 - 20P and Qs = 20P, respectively. Assume that the free trade price of commodity X is $1, and nation A imposes an import quota of 20X. Draw a figure similar to Figure 9.1 in Salvatore and compute the following: * nation A’s price, production, consumption and imports of commodity X under free trade *nation A’s price, production, consumption and imports of commodity X under the import quota * consumption, production and trade effects of the import quota *dollar value of the consumer surplus and producer surplus before and after the imposition of the import quota *dollar value of the deadweight loss of the import quota, assuming that import licenses are distributed to selected domestic importers free of charge *the maximum price government can charge for the import licenses, and the subsequent dollar value of the deadweight loss of the import quota
Suppose that nation A is a small nation with
* nation A’s price, production, consumption and imports of commodity X under free trade
*nation A’s price, production, consumption and imports of commodity X under the import quota
* consumption, production and trade effects of the import quota
*dollar value of the
*dollar value of the
*the maximum price government can charge for the import licenses, and the subsequent dollar value of the deadweight loss of the import quota
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