Use the following to answer questions:
-(Figure: The Market for Calculators) Use Figure: The Market for Calculators.Assume that S and D represent the domestic demand and supply of calculators,respectively.The world price,P_W,equals $100.The government imposes a quota restricting imports to 25 calculators.If import licenses are granted to foreigners,the net loss due to the import quota is equal to area:

Question

Use the following to answer questions:

-(Figure: The Market for Calculators) Use Figure: The Market for Calculators.Assume that S and D represent the domestic demand and supply of calculators,respectively.The world price,P_W,equals $100.The government imposes a quota restricting imports to 25 calculators.If import licenses are granted to foreigners,the net loss due to the import quota is equal to area:

Quizplus · Accepted Answer

The net loss due to the import quota can be calculated as the combined deadweight loss (areas G and J) and the loss to consumers and foreign producers (areas H and I) that results from the restricted imports. Therefore, the correct answer is C, which includes all four areas (G + H + I + J) as components of the net loss. Areas K and L, representing the gain to domestic producers and the revenue generated by import licenses, respectively, do not contribute to the net loss and are therefore not included in the answer.

Use the Following to Answer Questions