Figure 18.1
-Refer to Figure 18.1. With a tariff or quota, what is the equilibrium price of gloves in Duckland?

Question

Quizplus · Accepted Answer

The equilibrium price with a tariff or quota is where the domestic supply curve intersects the demand curve, which is at $10. At this price, the domestic producers are willing to supply Qd amount of gloves, and the domestic consumers are willing to buy Qs amount of gloves.

There is no information given about the cost of production or the world price of gloves, so we cannot determine whether Duckland's producers will gain or lose from the tariff or quota. However, we can say that the tariff or quota will result in a higher domestic price and lower import quantity, which may benefit domestic producers at the expense of domestic consumers.

Figure 18.1 -Refer to Figure 18.1. with a Tariff or Quota, What