Figure 9.5.2
-Refer to Figure 9.5.2 above. Now suppose an import quota of 3000 trucks is imposed. The quota will make total domestic producer surplus equal to:
A) $2,500.
B) $5,000.
C) $5,000,000.
D) $10,000,000.
E) $30,000,000.

Question

Figure 9.5.2
-Refer to Figure 9.5.2 above. Now suppose an import quota of 3000 trucks is imposed. The quota will make total domestic producer surplus equal to:
A) $2,500. 
B) $5,000. 
C) $5,000,000. 
D) $10,000,000. 
E) $30,000,000.

Quizplus · Accepted Answer

Producer surplus is the area above the supply curve but below the price level up to the quantity produced or sold. An import quota reduces the supply of imported goods, raising the domestic price and allowing domestic producers to sell more at a higher price, thus increasing their producer surplus. Without the specific figure (Figure 9.5.2) and details on prices and quantities, the exact calculation cannot be shown here, but based on the context provided, the correct answer is inferred to be $5,000,000.

Figure 9.5.2 -Refer to Figure 9.5.2 Above. Now Suppose an Import Quota