Figure 5.5. Mexico's Television Market
-Consider Figure 5.5.Compared to free trade, the Japanese export quota leads to an increase in Mexican producer surplus of $1,050.

Question

Figure 5.5. Mexico's Television Market 
-Consider Figure 5.5.Compared to free trade, the Japanese export quota leads to an increase in Mexican producer surplus of $1,050.

Quizplus · Accepted Answer

An export quota restricts the quantity of goods that can be exported, which can lead to higher prices in the importing country. This can increase the producer surplus for domestic producers in the importing country, such as Mexico, as they can sell their goods at higher prices due to reduced competition from imports.