Using a graph, illustrate what the market effects of a quota, a ...

[Yi-Chen]

Using a graph, illustrate what the market effects of a quota, a tariff, or a complete ban on imports would be.
 
  What will be an ideal response?

Question 2

The above table has data from the nation of Media. Based on these data, when disposable income is 8.0 trillion, saving is
 
  A) -1.5 trillion. B) 1.5 trillion. C) 7.5 trillion. D) 0.5 trillion. E) -0.5 trillion.

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Answer to Question 1

As shown in the figure, the demand for the product is the same in all cases; the question is what the supply curve would look like. In the case of the complete ban, the supply curve is the domestic supply curve. It shifts to the right if the tariff or quota is put in place, and shifts further to the right in the world without trade barriers. So free trade has the highest quantity and lowest price, an import ban has the lowest quantity and highest price, and the tariff or quota is somewhere in between the two cases.

Answer to Question 2

D

[Yi-Chen]

YES! Correct, THANKS for helping me on my review

[shailee]

Excellent