Figure 9-3

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.If there was no quota,how many pounds of peanuts would domestic consumers purchase and what quantity would be imported?

Question

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.If there was no quota,how many pounds of peanuts would domestic consumers purchase and what quantity would be imported?

Quizplus · Accepted Answer

Without the quota, domestic consumers would purchase 40 million pounds of peanuts, which is the quantity where the domestic demand curve intersects with the world supply curve. At this quantity, the price would be $0.20 per pound, which is the same price as with the quota. However, in the absence of the quota, the quantity imported would be 30 million pounds, which is the difference between the domestic demand and domestic supply at the world price of $0.20 per pound.

Figure 9-3 Since 1953 the United States Has Imposed a Quota to Has