The diagram below illustrates the international tin market.Assume that producing and consuming countries establish an international commodity agreement under which the target price of tin is $5 per pound.
Figure 7.1.Defending the Target Price in Face of Changing Demand Conditions

-Consider Figure 7.1.Suppose the demand for tin decreases from D0 to D2.Under a system of export quotas,the tin producers could maintain the target price by:

Question

The diagram below illustrates the international tin market.Assume that producing and consuming countries establish an international commodity agreement under which the target price of tin is $5 per pound.
Figure 7.1.Defending the Target Price in Face of Changing Demand Conditions
 
-Consider Figure 7.1.Suppose the demand for tin decreases from D0 to D2.Under a system of export quotas,the tin producers could maintain the target price by:

Quizplus · Accepted Answer

When the demand for tin decreases from D0 to D2, the equilibrium quantity decreases from Q0 to Q2, causing a surplus of 30 pounds (Q2-Q1). To maintain the target price of $5 per pound, the producers would have to decrease the quantity supplied by 30 pounds, the same amount as the surplus. Therefore, the correct choice is D, decreasing the quantity of tin supplied by 30 pounds.

The Diagram Below Illustrates the International Tin Market