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aq15Ap - import quotas from the US C Because the US has...

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15 April The US heavily protects sugar-growing by means of quotas [quantitative restrictions]. Which of the following groups benefit [write B] and which bear costs [write C] because of this protection? a. Owners of sugarcane-growing land in South Florida; B. Protection raises the US price of sugar, and therefore rents to sugar-growing land. b. Purchasers of candy in the US; C. Higher sugar prices => higher candy prices. c. Manufacturers of soft drinks in the US; C. Sugar [and/or corn syrup] are important ingredients of soft drinks, so their costs are raised. d. Farmers in the US who grow corn, the source of corn syrup, a substitute for sugar; B. Price of sugar goes up, demand for the substitute corn syrup goes up. e. Governments of small islands in the Caribbean that receive sugar import quotas from the US; B. They get to sell sugar to the US at the higher US price, rather than the lower world price. f. Governments of larger countries in Latin America that grow sugar but don’t get sugar
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Unformatted text preview: import quotas from the US; C. Because the US has quotas on imports of sugar, the US buys less sugar than it otherwise would, so reduces demand for sugar and depresses the price in the rest of the world below what it would be if the US had no quota. So countries that don’t get quotas bear the cost of a lower price for the sugar they do grow. g. Farmers in the Midwest who grow sugar beet; B. More sugar is actually produced from beet than from cane in North America. h. Consumers of sugar in Hong Kong, which has free trade in sugar; B. US quotas depress the world price, so benefit consumers in the rest of the world, including Hong Kong. i. Producers of rum and cane spirit in the Caribbean [both use sugar cane as an input]; B. The world price for sugar, and therefore sugar cane, is depressed by the US quotas, and therefore these producers face a lower price for their input, i.e. lower costs, than they otherwise would [partly explaining why most rum in the US is imported]....
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