9. The nation of Acirema is small and unable to affect world prices. It imports peanuts at...

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9. The nation of Acirema is “small” and unable to affect world prices. It imports peanuts at the price of $10 per bag. The demand curve is D = 400 - 10P.

The supply curve is S = 50 + 5P.

Determine the free trade equilibrium. Then calculate and graph the following effects of an import quota that limits imports to 50 bags.

a. The increase in the domestic price.

b. The quota rents.

c. The consumption distortion loss.

d. The production distortion loss.

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International Finance Theory And Policy

ISBN: 9781292019550

10th Edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

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Question Posted: Oct 02, 2024 07:03 AM

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International Finance Theory And Policy

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