Figure 5.6 Domestice Supply and demand for Wine - U.S.
-Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.If the U.S.imposes a quota of 15 bottles of wine, how much wine will U.S.consumers demand, how much wine will U.S.producers produce and how much wine will be imported?

Question

Figure 5.6 Domestice Supply and demand for Wine - U.S. 
-Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.If the U.S.imposes a quota of 15 bottles of wine, how much wine will U.S.consumers demand, how much wine will U.S.producers produce and how much wine will be imported?

Quizplus · Accepted Answer

With a quota of 15 bottles, the domestic demand will be met by domestic producers first. At a price of $15 per bottle, producers are willing to supply 15 bottles. This leaves a shortage of 15 bottles which will be filled by imports from the EU at a price of $8 per bottle. Therefore, the U.S. consumers will demand 30 bottles in total (15 from domestic producers and 15 from imports), U.S. producers will produce 15 bottles, and 15 bottles will be imported. Choice D is the only option that matches these quantities.

Figure 56 Domestice Supply and Demand for Wine - U