The figure below shows the demand (D) and supply (S) curves of corn syrups. Figure 21.3
- In Figure 21.3,with an import quota of 30 gallons of corn syrup,what is the new equilibrium price?

Question

The figure below shows the demand (D) and supply (S) curves of corn syrups. Figure 21.3 
- In Figure 21.3,with an import quota of 30 gallons of corn syrup,what is the new equilibrium price?

Quizplus · Accepted Answer

With an import quota of 30, the domestic supply curve shifts to the right by 30. The new equilibrium occurs at the intersection of the new supply curve (S') and the demand curve (D) which is at a price of $8. Therefore, the correct answer is C, $8.

The Figure Below Shows the Demand (D) and Supply (S)