Problem
The domestic demand for turnips is given by P = 128 - (1/2)Q. The market supply of domestic suppliers is given by P = 12+ (1/4)Q, and the world price is $32 per bushel.
(a) First graph this market and then solve for the equilibrium quantity purchased.
(b) How much of the quantity traded will be produced domestically and how much will be imported?
(c) Assume now that a quota of 76 units is put in place. Illustrate the resulting market equilibrium graphically.
(d) Compute the domestic price of turnips and the associated quantity traded with the quota in place? [Hint: you could shrink the demand curve in towards the origin by the amount of the quota and equate the result with the domestic supply curve.]
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.