The figure below shows the domestic supply and demand demand for shoes. As labeled, the no-trade domestic equilibrium occurs at a price of $80 per pair of shoes. If international trade is permitted, the world supply price is labeled at $60 per pair of shoes. P = $80 P = $60 S 1,000 1,200 1,300 Number of shoes D Suppose the government implements an import quota of 200 pairs of shoes. Which of the following statements is false? a. Producers will be made better off. b. The resulting equilibrium price will be higher than $60. c. The resulting equilibrium price will be higher than $80. d. The number of pairs of shoes imported into the country will decrease.
The figure below shows the domestic supply and demand demand for shoes. As labeled, the no-trade domestic equilibrium occurs at a price of $80 per pair of shoes. If international trade is permitted, the world supply price is labeled at $60 per pair of shoes. P = $80 P = $60 S 1,000 1,200 1,300 Number of shoes D Suppose the government implements an import quota of 200 pairs of shoes. Which of the following statements is false? a. Producers will be made better off. b. The resulting equilibrium price will be higher than $60. c. The resulting equilibrium price will be higher than $80. d. The number of pairs of shoes imported into the country will decrease.
Chapter12: The Partial Equilibrium Competitive Model
Section: Chapter Questions
Problem 12.8P
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