Section 1 Question 1 (20 points) Saved In 2016, imports of sugar to U.S. were limited to 6.1 billion pounds. This restriction pushed the domestic price to 27 cents per pound. Government expended quota from 6.1 billion pounds to 10 billion pounds. Total market demand for sugar in the U.S. and the supply of U.S. producers are given as: QD = 31.20 - 0.27P Qs = -8.95 + 0.99P U.S sugar market in 2016: U.S. production 2016 17.9 billion pounds U.S. consumption 2016 24 billion pounds U.S. price 2016 27 cents per pound World price 2016 17 cents per pound1. What would be the new US domestic price for sugar? (2 points) 2. Refer to the diagram below and calculate how much would consumers gain and domestic producers lose as a result from government policy? (6 points) 3. Refer to the diagram below and explain the effect of quota on deadweight loss (increase/decrease). Indicate the area of deadweight loss and show your calculations. (4 points) 4. Refer to the diagram below and explain the effect of quota on foreign producers (profit/loss). Indicate the area of profit/loss earned by foreigners and show your calculations. (8 points) U.S. Supply U.S. Demand