Figure 5.5. Mexico's Television Market
-Consider Figure 5.5.Suppose that the governments of Mexico and Japan negotiate a voluntary export agreement in which Japanese TV exports to Mexico are limited to 8 units.Under the quota, the price of TVs in Mexico equals $250 while Mexicans produce 10 TVs and purchase 18 TVs.

Question

Figure 5.5. Mexico's Television Market 
-Consider Figure 5.5.Suppose that the governments of Mexico and Japan negotiate a voluntary export agreement in which Japanese TV exports to Mexico are limited to 8 units.Under the quota, the price of TVs in Mexico equals $250 while Mexicans produce 10 TVs and purchase 18 TVs.

Quizplus · Accepted Answer

With the quota in place, the price of TVs in Mexico would likely increase due to the restriction on supply. Mexican producers may also have an opportunity to increase production and sales within their domestic market. The quantities of TVs produced and purchased by Mexican consumers may change, but the information provided does not give enough detail to determine those changes.