Use the diagram to analyze the effects of imposing an import quota to protect domestic producers of wine. The world price is Pw. Canadian Market for Wine a. Explain why an import quota of 14 thousand units raises the domestic price to Pw + t. At the world price of Pw, Canadian consumers demand 41 thousand units of wine, 36 thousand of which must be imported. The import quota of 14 thousand units creates domestic excess demand at price Pw, which drives up the domestic price until demand for imported wine just equals 14 thousand units. b. With import quotas, the Canadian government earns no tariff revenue. Who gets this money now? Price of Wine ($) O A. Foreign governments Pw+t O B. Domestic consumers C B A D XC. Domestic producers *D. Foreign producers -Quota- D O E. Foreign consumers :5 16 :30 141 Quantity of Wine (thousand units) c. An import quota is than a tariff for Canada as a whole because the deadweight loss for the importing country with an import quota is V, whereas with a tariff the deadweight loss is