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Unformatted text preview: e) Suppose there was a quota placed on this market. What values for the quota would make the quota binding? f) Suppose the quota is set at X quota = 75. Carefully and completely describe the consequence of this quota on both demanders and suppliers. Show its effect in your diagram. g) Suppose Ima Smarty insists that a better policy is to impose a price floor that is set equal to the market price you would get with the quota. Analyze Ima's suggestion using your graph and the demand and supply equations....
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This note was uploaded on 03/27/2009 for the course ECON 1110 taught by Professor Wissink during the Fall '06 term at Cornell.
- Fall '06