The diagram below shows the domestic demand and supply curves for cotton towels in Canada. The prevailing world price of cotton towels is P_W. Assume that all cotton towels are identical.
FIGURE 34- 3
-Refer to Figure 34- 3. If the Canadian government imposes a quota on imported cotton towels of the amount (Q₃- Q₂) , then the deadweight loss to the Canadian economy is shown by the area

Question

The diagram below shows the domestic demand and supply curves for cotton towels in Canada. The prevailing world price of cotton towels is P_W. Assume that all cotton towels are identical.

The diagram below shows the domestic demand and supply curves for cotton towels in Canada. The prevailing world price of cotton towels is P<sub>W</sub>. Assume that all cotton towels are identical. FIGURE 34- 3 -Refer to Figure 34- 3. If the Canadian government imposes a quota on imported cotton towels of the amount (Q<sub>3</sub><sub> </sub>- Q<sub>2</sub>) , then the deadweight loss to the Canadian economy is shown by the area A) B + C + D. B) B + C + D + G + H + I. C) C + H. D) G + H + I. E) H.

FIGURE 34- 3
-Refer to Figure 34- 3. If the Canadian government imposes a quota on imported cotton towels of the amount (Q₃- Q₂) , then the deadweight loss to the Canadian economy is shown by the area

Quizplus · Accepted Answer

The deadweight loss to the Canadian economy is shown by the area of the triangle formed by the points B, C, and D. Therefore, the correct choice is A. Choices B, C, D, and E include areas that are not part of the deadweight loss due to the quota.

The Diagram Below Shows the Domestic Demand and Supply Curves