If you are a walnut producer , which policy would you prefer to remain in place, or are you indifferent or unsure?Explain.

The price of walnuts on world markets is $2.00 per kilogram.The best estimates are that with free trade domestic consumption would be 240 million kilograms per year, and domestic production would be 50 million kilograms per year.

The country's government does not permit free trade.Rather, the government currently has the following set of policies toward imports:

• The government imposes a tariff rate of 40% on walnut imports, and
• The government also imposes an import quota of 80 million kilograms of walnuts imported per year. The government has awarded the license rights to import the quota amount of walnuts to a set of established wholesalers in the country.There is no separate payment to the government for the license rights. (The walnut-importing firms do not themselves also produce walnuts.)

With these policies in place, the domestic price is $3.40 per kilogram of walnuts.

It is now necessary for the government to rescind one of the two policies.The other policy can stay in place as it is.(That is, if the tariff is removed, then the import quota remains in place at 80 million kilograms per year.If the import quota is removed, then the tariff of 40% remains in place.)