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Chapter 32: Q.14 (page 730)

Take a look at Figure 32-3. What is the effect on foreign textile importers' total revenues of the imposition of the quota that generates a movement from point E1 to point E2?

Short Answer

Expert verified

The foreign textile importers' total revenues increases

Step by step solution

01

Given Information

According to the outline, the most extreme amount of import is 800large yards each year. The cost expanded to $1.50per yard. Without the limitation, it might have been 900 yards at the cost of$1.00 per yard.

02

Explanation

Without import standards, the all-out income created for the shippers would have been $900million.

In any case, with the limitations, as the stock is discounted, the cost has expanded. So presently the all-out income produced for the merchants is

$1.5×800million=$1200million

Hence, the foreign textile importers' total revenues increases

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