Figure 7.3

Assume that the Canadian government limits the import of peanuts.
-Refer to Figure 7.3.With a quota in place, what is the quantity consumed in the domestic market and how much of this is supplied by domestic producers?
A)Domestic consumption equals 28 thousand kilograms of which 18 thousand kilograms are produced by domestic producers.
B)Domestic consumption equals 40 thousand kilograms of which 22 thousand kilograms are produced by domestic producers.
C)Domestic consumption equals 34 thousand kilograms of which 16 thousand kilograms are produced by domestic producers.
D)Domestic consumption equals 34 thousand kilograms of which 18 thousand kilograms are produced by domestic producers.

Question

Figure 7.3
  
Assume that the Canadian government limits the import of peanuts.
-Refer to Figure 7.3.With a quota in place, what is the quantity consumed in the domestic market and how much of this is supplied by domestic producers?
A)Domestic consumption equals 28 thousand kilograms of which 18 thousand kilograms are produced by domestic producers. 
B)Domestic consumption equals 40 thousand kilograms of which 22 thousand kilograms are produced by domestic producers. 
C)Domestic consumption equals 34 thousand kilograms of which 16 thousand kilograms are produced by domestic producers. 
D)Domestic consumption equals 34 thousand kilograms of which 18 thousand kilograms are produced by domestic producers.

Quizplus · Accepted Answer

With a quota in place, the quantity consumed in the domestic market is the difference between the quantity supplied by domestic producers and the quantity imported. From the graph, we can see that the quantity supplied by domestic producers is 18 thousand kilograms, and the quantity imported is 16 thousand kilograms (the difference between the 34 thousand kilograms demanded and the 18 thousand kilograms supplied domestically). Therefore, the quantity consumed domestically is 18 thousand kilograms + 16 thousand kilograms = 34 thousand kilograms. Thus, the answer is D.

Figure 7.3 Assume That the Canadian Government Limits the Import of Peanuts