Question: In the first quarter of 2012 the world price for
In the first quarter of 2012, the world price for raw sugar, 24¢ per pound, was about 70% of the U.S. price, 34¢ per pound, because of quotas and tariffs on sugar imports. As a consequence, American- made corn sweeteners can be profitably sold domestically. A decade ago, the U.S. Commerce Department estimated that the quotas and price support reduced American welfare by about $3 billion a year, so, each dollar of profit of a domestic manufacturer such as Archer Daniels Midland costs Americans about $10. Use graphs to show the effects of a quota on sugar in both the sugar and corn sweetener markets.
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