jnu question

classic Classic list List threaded Threaded
3 messages Options
Reply | Threaded
Open this post in threaded view
|

jnu question

tanudas
To reduce imports suppose the government of Norway imposes a quota equal to 800 computers. Compared to what occurred in the absence of trade Norway's consumer surplus will _____and producer surplus will _____
A. increase increase
B.increase decrease
C.decrease increase
D.decrease decrease

Can someone please explain this?
Reply | Threaded
Open this post in threaded view
|

Re: jnu question

tania
I think the answer is C.
The consumer surplus will decrease becoz the quota will increase the price of the computers being imported as well as its domestic substitutes.
the producer surplus will increase bcoz of the increase in price and it benefit the domestic producers.

what is the correct answer given?
Reply | Threaded
Open this post in threaded view
|

Re: jnu question

Priti
In reply to this post by tanudas
Its optio c. Consumer surplus will decrease and producer surplus will increase.