Consider the following information pertaining to a country's imports, consumption, andproduction of t-shirts following the removal of Multi Fiber Agreement (MFA) quotas:UnderAfterМFAМFAWorld Price ($/shirt)Domestic Price (S/shirt)Domestic Consumption (millions of shirts)Domestic Production (millions of shirts)2.002.002.502.001001257550a. Use the information in the table above to graph the effects of the quota removalon domestic consumption and production. Include a companion graph for theworld market like that shown in class.b. The deadweight loss associated with the quota is:c. The quota rents that were earned under the quota are:d. The gain in consumer surplus associated with quota removal is:e. The loss in producer surplus from the removal of the quota is:f. Assuming that the foreign government assigned the quota licenses, the amountthe home country gained from removal of the quota is:4.

(b) The deadweight loss associated with the quota = B+D(c) The quota rents that were earned under the quota = C(d) The gain in consumer surplus aassociated with the quota removal = A+B+C+D(e) The loss in producer surplus from the removal of the quota = - A (e) The loss in producer surplus from the removal of the quota = - A S 2.5 А С B D 2 o 125 100 50 75

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The deadweight loss associated with the quota is: The quota rents that were earned under the quota are: The gain in consumer surplus associated with quota removal is: The loss in producer surplus from the removal of the quota is:

The deadweight loss associated with the quota is: The quota rents that were earned under the quota are: The gain in consumer surplus associated with quota removal is: The loss in producer surplus from the removal of the quota is:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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