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No handwriting plz. Just typing 1. (16 points) Import Quota Suppose that nation A is a small nation with demand and supply of commodity X
No handwriting plz. Just typing
1. (16 points) Import Quota
Suppose that nation A is a small nation with demand and supply of commodity X given by Qd = 120 - 20P and Qs = 20P, respectively. Assume that the free trade price of commodity X is $1, and nation A imposes an import quota of 20X. Draw a figure similar to Figure 9.1 in Salvatore and compute the following:
- (2 points) nation A's price, production, consumption and imports of commodity X under free trade
- (4 points) nation A's price, production, consumption and imports of commodity X under the import quota
- (2 points) consumption, production and trade effects of the import quota
- (4 points) dollar value of the consumer surplus and producer surplus before and after the imposition of the import quota
- (2 points) dollar value of the deadweight loss of the import quota, assuming that import licenses are distributed to selected domestic importers free of charge
- (2 points) the maximum price government can charge for the import licenses, and the subsequent dollar value of the deadweight loss of the import quota
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