Following equations characterize demand and domestic supply for sugar in the U.S.:
QD = 29: 73 - 0.19P and QS = -7: 95 + .66P . In 2011, imports were limited to 6.9 billion pounds, which pushed the domestic price to 36 cents per pound. Suppose imports were expanded to 10 billion pounds.
(a) What would be the new U.S. domestic price? (Hint: The difference between the domestic quantities demanded and supplied, QD - QS , is equal to the quota)
(b) How much would consumers gain and domestic producers lose?
(c) What would be the eect on deadweight loss and foreign producers?