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# Price of peanuts in the world market is \$12 per bag Country A has demand curve D=450-10P and supply curve S=50+10P Suppose Country A is a small country and imposes an import quota on peanuts that

### Price of peanuts in the world market is \$12 per bag Country A has demand curve D=450-10P and supply curve S=50+10P Suppose Country A is a small country and imposes an import quota on peanuts that

Price of peanuts in the world market is \$12 per bag. Country A has demand curve D=450-10P and supply curve S=50+10P. Suppose Country A is a small country and imposes an import quota on peanuts that limits the imports to 100 bags.With the import quota of 100 bags, what is the change of consumer surplus compared with free trade?(a) -945(b) 945(c) -450(d) -725Using information from above, with the import quota of 100 bags, what is the change of producer surplus compared with free trade?(a) 255(b) -120(c) 450(d) 555Using information from above, with the import quota of 100 bags, what is the change of total welfare change from free trade (assume that quota rent is going to country A)?(a) -120(b) -100(c) -90(d) -690Using information from above, find the tariff that will limit the imports also to 100 bags and express it in two ways: specific tariff and ad volarem tariff, respectively(a) \$4.5 per unit or 32.5% of the value(b) \$4 per unit or 30% of the value(c) \$3 per unit or 25% of the value(d) \$3 per unit of 20% of the valueUsing information from above, now suppose country A imposes a tariff of \$3 per unit. Also assume country A is a LARGE country. This tariff policy decreases the world market equilibrium price to \$10. Now calculate the change of consumer surplus from free trade.(a) -945(b) 945(c) -450(d) -325Using the same information from above, calculate the change of producer surplus with a tariff of \$3 per unit from free trade.(a) -245(b) 245(c) 250(d) 175Using the same information from above, calculate the change of total welfare with a tariff of 3 per unit from free trade.(a) 245(b) 270(c) 200(d) -175

mahesh 09-Aug-2020