Asked by JOSHUA MILLER on Jul 26, 2024

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Refer to Figure 9.5.2 above. Now suppose an import quota of 3000 trucks is imposed. The quota will make total domestic producer surplus equal to:

A) $2,500.
B) $5,000.
C) $5,000,000.
D) $10,000,000.
E) $30,000,000.

Domestic Producer Surplus

The difference between what domestic producers are willing to accept for their goods versus what they actually receive, usually measured in the context of international trade.

Import Quota

A governmental limit on the quantity of a particular commodity that can be imported into a country.

Total Surplus

The sum of consumer and producer surplus, representing the overall benefit to society from the trading of goods and services.

  • Calculate the ramifications of taxes and subsidies on the welfare of consumers and producers.
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Shawndavia EdwardsJul 30, 2024
Final Answer :
C
Explanation :
Producer surplus is the area above the supply curve but below the price level up to the quantity produced or sold. An import quota reduces the supply of imported goods, raising the domestic price and allowing domestic producers to sell more at a higher price, thus increasing their producer surplus. Without the specific figure (Figure 9.5.2) and details on prices and quantities, the exact calculation cannot be shown here, but based on the context provided, the correct answer is inferred to be $5,000,000.