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On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 150,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 |-| 50 SK D K 100 150 200 250 300 350 QUANTITY (Thousands of tons) P W 400 450 500 SK+Q The equivalent import tariff for Kazakhstan's grape import quota is $ Price with Quota A Change in PS Quota Rents DWL (?) In the previous graph, use the green area (triangle symbol) to shade the area that represents the effect of the quota on domestic producer surplus (PS) relative to domestic producer surplus under free trade. Use the tan quadrilateral (dash symbols) to shade the area that represents the quota rents. Finally, use the black areas (plus symbol) to indicate the deadweight loss (DWL) resulting from the quota's consumption and protective effects. per ton of grapes. If Kazakhstan's government auctions off the quota licenses in a well-organized, competitive auction, Kazakhstan experiences a dead weight loss of (Hint: Select a shaded region to see its area. Be sure to adjust for the units on the quantity axis.) $

On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 150,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 |-| 50 SK D K 100 150 200 250 300 350 QUANTITY (Thousands of tons) P W 400 450 500 SK+Q The equivalent import tariff for Kazakhstan's grape import quota is $ Price with Quota A Change in PS Quota Rents DWL (?) In the previous graph, use the green area (triangle symbol) to shade the area that represents the effect of the quota on domestic producer surplus (PS) relative to domestic producer surplus under free trade. Use the tan quadrilateral (dash symbols) to shade the area that represents the quota rents. Finally, use the black areas (plus symbol) to indicate the deadweight loss (DWL) resulting from the quota's consumption and protective effects. per ton of grapes. If Kazakhstan's government auctions off the quota licenses in a well-organized, competitive auction, Kazakhstan experiences a dead weight loss of (Hint: Select a shaded region to see its area. Be sure to adjust for the units on the quantity axis.) $

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: Application: International Trade
Section: Chapter Questions
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Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where Sk is the supply curve and Dk is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 150,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 150,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 50 St D K Pw W 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of tons) SK+Q The equivalent import tariff for Kazakhstan's grape import quota is $ Price with Quota A Change in PS Quota Rents C DWL ? In the previous graph, use the green area (triangle symbol) to shade the area that represents the effect of the quota on domestic producer surplus (PS) relative to domestic producer surplus under free trade. Use the tan quadrilateral (dash symbols) to shade the area that represents the quota rents. Finally, use the black areas (plus symbol) to indicate the deadweight loss (DWL) resulting from the quota's consumption and protective effects. per ton of grapes. If Kazakhstan's government auctions off the quota licenses in a well-organized, competitive auction, Kazakhstan experiences a deadweight loss of
Transcribed Image Text:Kazakhstan is a grape producer, as well as an importer of grapes. Suppose the following graph shows Kazakhstan's domestic market for grapes, where Sk is the supply curve and Dk is the demand curve. The free trade world price of grapes (Pw) is $800 per ton. Suppose Kazakhstan's government restricts imports of grapes to 150,000 tons. The world price of grapes is not affected by the quota. Analyze the effects of the quota on Kazakhstan's welfare. On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota SK+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 150,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 50 St D K Pw W 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of tons) SK+Q The equivalent import tariff for Kazakhstan's grape import quota is $ Price with Quota A Change in PS Quota Rents C DWL ? In the previous graph, use the green area (triangle symbol) to shade the area that represents the effect of the quota on domestic producer surplus (PS) relative to domestic producer surplus under free trade. Use the tan quadrilateral (dash symbols) to shade the area that represents the quota rents. Finally, use the black areas (plus symbol) to indicate the deadweight loss (DWL) resulting from the quota's consumption and protective effects. per ton of grapes. If Kazakhstan's government auctions off the quota licenses in a well-organized, competitive auction, Kazakhstan experiences a deadweight loss of
On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota Sk+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 150,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 W 1600 1200 800 400 0 0 50 SK DK Pw W 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of tons) SK+Q The equivalent import tariff for Kazakhstan's grape import quota is $ Price with Quota A Change in PS Quota Rents C DWL (?) In the previous graph, use the green area (triangle symbol) to shade the area that represents the effect of the quota on domestic producer surplus (PS) relative to domestic producer surplus under free trade. Use the tan quadrilateral (dash symbols) to shade the area that represents the quota rents. Finally, use the black areas (plus symbol) to indicate the deadweight loss (DWL) resulting from the quota's consumption and protective effects. per ton of grapes. If Kazakhstan's government auctions off the quota licenses in a well-organized, competitive auction, Kazakhstan experiences a deadweight loss of $ (Hint: Select a shaded region to see its area. Be sure to adjust for the units on the quantity axis.)
Transcribed Image Text:On the following graph, use the purple line (diamond symbol) to draw the Kazakhstan's supply curve including the quota Sk+Q. (Hint: Draw this as a straight line even though this curve should be equivalent to the domestic supply curve below the world price.) Then use the grey line (star symbol) to indicate the new price of grapes with a quota of 150,000 grapes. PRICE (Dollars per ton) 4000 3600 3200 2800 2400 2000 W 1600 1200 800 400 0 0 50 SK DK Pw W 100 150 200 250 300 350 400 450 500 QUANTITY (Thousands of tons) SK+Q The equivalent import tariff for Kazakhstan's grape import quota is $ Price with Quota A Change in PS Quota Rents C DWL (?) In the previous graph, use the green area (triangle symbol) to shade the area that represents the effect of the quota on domestic producer surplus (PS) relative to domestic producer surplus under free trade. Use the tan quadrilateral (dash symbols) to shade the area that represents the quota rents. Finally, use the black areas (plus symbol) to indicate the deadweight loss (DWL) resulting from the quota's consumption and protective effects. per ton of grapes. If Kazakhstan's government auctions off the quota licenses in a well-organized, competitive auction, Kazakhstan experiences a deadweight loss of $ (Hint: Select a shaded region to see its area. Be sure to adjust for the units on the quantity axis.)
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