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curves in DOMESTIC
MARKET
Quantity of imports before quota: 4000 (5000-1000: di erence between domestic supply and
demand to meet customer demand is imported)
Domestic supplier revenue before quota: 10 x 1000 = 10 000 (Revenue = world price x quantity)
Overseas producer revenue before the quota: 10 x 4000 = 40 000 (Revenue = world price x
imports)
Increase in price due to quota: 12 - 10 = $2 (Di erence in WP and Price after subsidy)
Quantity supplied after the quota: 2000 (Following $12 to see quantity supplied domestically)
Quantity of demanded after quota: 4000 (Following $12 to see quantity demanded domestically)
Domestic supplier revenue after quota: 2000 x 12 = 24 000 (Revenue = price after subsidy x
quantity)
Overseas producer revenue after quota: 2000 x 12 = 24 000 (Revenue = price after subsidy x
quantity)
Note: Government makes NO revenue with Quota
Gain to domestic producer revenue: 24 000 - 10 000 = 14 000 (revenue before quota at world
price - revenue after quota and increase in price)
Decrease in imports: 4000 - 2000 = 2000 (di erence of imports at WP (purple line) and imports
after quota (green line)
Domestic supplier revenue before quota: 50 x 100 = 5000 (Revenue = price x quantity)