Question: Consider the market for widgets. Widgets are produced in the United States, unless producers aren't willing to meet the quantity demanded at a particular price. In that case, widgets are imported.
Suppose that the price with free trade is $7. If lawmakers want to ensure that U.S. widget producers can sell at least 8,000 widgets, what might they do?
|
Price
|
Quantity Demand
|
Quantity SuppliedDomestically
|
Quantity Imported
|
| $6 |
13,000 |
2,000 |
8,000 |
| $7 |
12,000 |
4,000 |
8,000 |
| $8 |
11,000 |
6,000 |
5,000 |
| $9 |
10,000 |
8,000 |
2,000 |
| $10 |
9,000 |
9,000 |
0 |
| $11 |
8,000 |
10,000 |
0 |
| |
|
|
|
- impose a tax on imported widgets
- provide a subsidy for imported widgets
- impose an import quota