Consider Figure 32-3. What is the effect on U.S. textile consumers' total expenditures of the imposition of the quota that generates a movement from point E1 to point E2?

Short Answer

Expert verified

The U.S. textile consumers' total expenditures increases

Step by step solution

01

Introduction

According to the graph, the greatest amount of imports is 800 large number of yards each year. The cost expanded to role="math" localid="1653542378049" $1.50 per yard. Without the limitation, it might have been 900 yards at the cost of $1.00 per yard. Without the import portion, the absolute income produced for the shippers would have been $$900 million.

02

Explanation

Be that as it may, with the limitations, as the stockpile marked down, the cost has expanded. So presently the complete income created for the shippers is $1.5×800=$1200million

So the absolute income for the merchants expanded.

As the cost of the product expanded, so the use of the buyers will increment. Beforehand buyer consumption was $900and after the inconvenience of share the shopper used increments to

$1.5×800=$1200million

Hence the U.S. textile consumers' total expenditures increased.

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Most popular questions from this chapter

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Suppose that the two nations in Problem 32-4 decide to specialize in producing the good for which they have a comparative advantage and to engage in trade. Would residents of both nations find a rate of exchange of 4 bottles of wine for 1 digital TV potentially agreeable? Why or why not?

To answer Problems 32-7 and 32-8, refer to the following table, which shows possible combinations of hourly outputs of modems and flash memory drives in South Shore and neighboring East Isle, in which opportunity costs of producing both products are constant.

Consider the table and answer the questions that follow.

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b. What is the opportunity cost of producing modems in Fast Isle? Of producing flash memory drives in East Isle?

c. Which nation has a comparative advantage in producing modems? Which nation has a comparative advantage in producing flash memory drives?

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