Table 31.3.1
Canada's Market for Widgets

-Table 31.3.1 shows the Canadian supply of and demand for widgets. Widgets are available on the world market for $7. Canadian widget producers convince the government to protect the domestic industry from cheap imports. If the Canadian government sets an import quota of 8 million widgets, the resulting price of a widget in Canada will be ________, and domestic production will be ________.
A)$6; 40 million
B)$7; 36 million
C)$8; 32 million
D)$9; 28 million
E)$10; 32 million

Question

Table 31.3.1
Canada's Market for Widgets
 
-Table 31.3.1 shows the Canadian supply of and demand for widgets. Widgets are available on the world market for $7. Canadian widget producers convince the government to protect the domestic industry from cheap imports. If the Canadian government sets an import quota of 8 million widgets, the resulting price of a widget in Canada will be ________, and domestic production will be ________.
A)$6; 40 million 
B)$7; 36 million 
C)$8; 32 million 
D)$9; 28 million 
E)$10; 32 million

Quizplus · Accepted Answer

With an import quota of 8 million widgets, the domestic supply must meet the remaining demand. At a price of $9, domestic production is 28 million, and with the quota, total supply is 36 million, meeting the demand.

Table 31.3.1 Canada's Market for Widgets