The table below shows the domestic demand and supply conditions for computers in a small country, Norway, in the world computer market :
| Price (in $) | Demand | Supply |
|---|---|---|
| 1000 | 3200 | 800 |
| 1500 | 2800 | 1200 |
| 2000 | 2400 | 1600 |
| 2500 | 2000 | 2000 |
| 3000 | 1600 | 2400 |
| 3500 | 1200 | 2800 |
To reduce imports, suppose the Government of Norway imposes a quota equal to 800 computers. Compared to what occurred in the absence of trade, Norway's consumer surplus will —— and producer surplus will ——.
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Trade policy: tariffs, quotas and protection has come up 63 times in 6 exams since 2010.
This question is on Quotas, tariff-quota equivalence and non-tariff barriers, part of Trade policy: tariffs, quotas and protection in International Economics.
Quantity limits on trade and how they compare with tariffs.
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Question from the JNU SSS 2012 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.