The graphs below pertain to the US and world markets for solar panels. Answer the questions below by filling in the blanks with the correct numbers and letters and circling the underlined that you judge to be correct. a) Under autarky, the US price of solar panels is $. Under free trade, the US price of solar panels is $and the US imports/exports __ millions of solar panels. The graph above assumes that the US sets a quota of 7 million on the imports of solar panels. b) The above quota increases/decreases the US price of solar panels to $_and the quota is/is not binding. c) After the quota is imposed, the world price of solar panels is $_and the US imports millions of solar panels. d) Calculate the tariff that would have the same effect on the US price and imports as the quota of 7 million:_______. e) The quota increases/decreases US consumer surplus by_,and increases/decreases US producer surplus by. f) The quota rent is area________. g) Under a VER, the quota rent stays in the US/goes abroad and the net effect on US welfare is_. h) If quota licenses are allocated to US firms, the quota rent stays in the US/goes abroad and the net effect on US welfare is_______. i) If the quota were increased to 8 million, the US price of solar panels would fall/rise/stay the same compared to the quota of 7 million. j) If the quota we

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 6: The graphs below pertain to the US and world markets for solar panels. Answer the questions below by filling in the blanks with the correct numbers and letters and circling the underlined that you judge to be correct. a) Under autarky, the US price of solar panels is $____. Under free trade, the US price of solar panels is $______and the US imports/exports ______ millions of solar panels. The graph above assumes that the US sets a quota of 7 million on the imports of solar panels. b) The above quota increases/decreases the US price of solar panels to $_____and the quota is/is not binding. c) After the quota is imposed, the world price of solar panels is $_______and the US imports ________millions of solar panels. d) Calculate the tariff that would have the same effect on the US price and imports as the quota of 7 million:_______________. e) The quota increases/decreases US consumer surplus by_________,and increases/decreases US producer surplus by____________. f) The quota rent is area______________________. g) Under a VER, the quota rent stays in the US/goes abroad and the net effect on US welfare is_____________. h) If quota licenses are allocated to US firms, the quota rent stays in the US/goes abroad and the net effect on US welfare is_____________. i) If the quota were increased to 8 million, the US price of solar panels would fall/rise/stay the same compared to the quota of 7 million. j) If the quota were set at ________million, the US price would be the autarky price.

Price
US supply
Price
20
20
16
12
m
14
US demand
10
D2 D₁ millions of
solar panels
7
14
World price line at Pw
US import Demand
millions of solar
panels imported

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