Example 9.6 (page 342) describes the effects of the sugar quota. In 2011, imports were limited to 6.9 billion pounds, which pushed the domestic price to 36 cents per pound. Suppose imports were expanded to 10 billion pounds.
a. What would be the new U.S. domestic price?
b. How much would consumers gain and domestic producers lose?
c. What would be the effect on deadweight loss and foreign producers?