The figure below shows the demand (D)and supply (S)curves of corn syrups. Figure 20.3 In Figure 20.3, 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 20.3  In Figure 20.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium price?

Quizplus · Accepted Answer

With the import quota, the supply curve is now limited to S1, where quantity supplied is restricted to 60 gallons. At a quantity of 60, the demand curve intersects with the supply curve at a price of $8 per gallon. This is the new equilibrium price. Therefore, the answer is (C) $8.

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