Refer to Problem 4. Suppose the Aoslian government applies an import quota that limits imports to 12 bushels.

a. Determine the quantity demanded, quantity supplied, and new domestic price with the quota.

b. Calculate the quota rent.

c. Assuming that the quota licenses are allocated to domestic producers, what is the net effect of the quota on Aoslia’s welfare?

d. Assuming that the quota rents are earned by foreign exporters, what is the net effect of the quota on Aoslia’s welfare?

Data from Problem 4:

Aoslia is a small country that takes the world price of corn as given. Its domestic supply and demand for corn are given by the following:

       

Transcribed Image Text:

D=45-3P| S = 3P-9