Answered: Price $12 $11 $10 $9 $8 $7 $5 $4 $3 $2…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Please see attachment and show your work .

What are the steps and answer with explanation?

Please examine the market for AC units below. In this market, the Home nation has imposed a quota limiting the number of AC units that foreign nations are allowed to export into the Home economy. If the home nation increased the level of the quota (theerby allowing more AC units to be imported into the Home economy), then we would expect ___________ to increase in the home economy.

1. consumer surplus

2. producer surplus

3. quota revenue

4. deadweight loss

Price
$12
$11
$10
$9
$8
$7
$6
$5
$4
$3
$2
$1
0
1
Home Market for AC Units
2
3 4 5 6
Quantity
$ S+Q
7
D
Pw
Price
Consumer Surplus
Producer Surplus
$12
$11
$10
$9
$8
$7
$6
$5
$4
$3
$2
$1
0
International Market for AC Units
Qq
Se
Dm
1 2 3 4 5 6 7 8 9
Quantity
Pw
10

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