$$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Quantity Demanded } \
\text { Domestically }
\end{array} & \text { Price } & \begin{array} { c }
\text { Quantity Supplied } \
\text { Domestically }
\end{array} \
\hline 1,400 & \$ 10 & 2,200 \
\hline 1,600 & 9 & 2,000 \
\hline 1,800 & 8 & 1,800 \
\hline 2,000 & 7 & 1,600 \
\hline 2,200 & 6 & 1,400 \
\hline 2,400 & 5 & 1,200 \
\hline
\end{array}$$ Refer to the accompanying table for a certain product's market in Econland. Assume that the world price of the product is $6. What would be the difference in the total revenue received by foreign
Producers after a quota of 400 units is imposed, compared against the total revenue received by
Foreign producers when a $1 per unit tariff is paid?

Question

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity Demanded } \
\text { Domestically }
\end{array} & \text { Price } & \begin{array} { c } 
\text { Quantity Supplied } \
\text { Domestically }
\end{array} \
\hline 1,400 & \$ 10 & 2,200 \
\hline 1,600 & 9 & 2,000 \
\hline 1,800 & 8 & 1,800 \
\hline 2,000 & 7 & 1,600 \
\hline 2,200 & 6 & 1,400 \
\hline 2,400 & 5 & 1,200 \
\hline
\end{array}$$ Refer to the accompanying table for a certain product's market in Econland. Assume that the world price of the product is $6. What would be the difference in the total revenue received by foreign
Producers after a quota of 400 units is imposed, compared against the total revenue received by
Foreign producers when a $1 per unit tariff is paid?

Quizplus · Accepted Answer

With a world price of $6, without any trade barriers, Econland would demand 2,200 units but only supply 1,400 units domestically, leading to an import of 800 units. With a quota limiting imports to 400 units, foreign producers can sell 400 units at the world price of $6, generating $2,400 in revenue. With a $1 tariff, the domestic price rises to $7, leading to a demand of 2,000 units and a domestic supply of 1,600 units, resulting in 400 units imported. However, the revenue for foreign producers is still $6 per unit (world price) for 400 units, totaling $2,400, but they also pay $400 in tariffs ($1 per unit for 400 units), making their net revenue without considering the tariff payment. The difference in revenue is not directly due to the tariff payment itself but rather how the quota can potentially allow for a price increase above the world price due to limited supply, which is not captured in the given scenario. Thus, the explanation provided does not accurately reflect a direct comparison based on the given data and assumptions. The correct analysis should focus on the impact of the quota and tariff on quantities and prices directly provided or implied by the scenario.

Refer to the Accompanying Table for a Certain Product's Market