Qs=17+2Pc and Q=45.5Pc Setting quantity demanded equal toquantity supplied 17+2Po=45.5 Po.or Pa=$4. At this price,the equilibrium quantity is25 thousand cubic feet( If a ceiling of$l is imposed,producers would supply 19 Tef and consumers would demand 40 Tef.The deadweight loss is the area below the demand curve and above the supply curve,between the quantities of 19 and 25 Tef. This can be computed as 0.5(5.2.4025-19+0.5(4-125-19)=$12.6bl1ion 11.Example 9.5 describes the effeets ofthe sugar quota.In 2001,imports were limit d to3 billion pou nds,which pushed the mestic pr e to 21.5 cents per pound. Suppose imports were expanded to 6.5 billion pounds a.What would be the new U.S.domestic price? We are given the equations for the total market demand for sugar in the U.S.and the supply of U.S.producers: Q0=26.53-.285P Q=8.70+1.214P The difference between the quantity demanded and supplied,Qp-Qs.is the amount of sugar imported that is restricted by the quota.If the guota is 26.53.285P)(8.70+1.214P)=6.5 35.23-1.499P=6.5 P=19.2 cents per pound At a price of 1 cent per pound s+(1)146 billon pounds and Qp=Qs+6.5=21.1 billion pounds QS = 17 + 2PG and QD = 45 - 5PG. Setting quantity demanded equal to quantity supplied, 17 + 2PG = 45 - 5PG, or PG = $4. At this price, the equilibrium quantity is 25 thousand cubic feet (Tcf). If a ceiling of $1 is imposed, producers would supply 19 Tcf and consumers would demand 40 Tcf. The deadweight loss is the area below the demand curve and above the supply curve, between the quantities of 19 and 25 Tcf. This can be computed as 0.5(5.2-4)(25-19)+0.5(4-1)(25-19)=$12.6 billion. 11. Example 9.5 describes the effects of the sugar quota. In 2001, imports were limited to 3 billion pounds, which pushed the domestic price to 21 .5 cents per pound. Suppose imports were expanded to 6.5 billion pounds. a. What would be the new U.S. domestic price? We are given the equations for the total market demand for sugar in the U.S. and the supply of U.S. producers: QD = 26.53 - .285P QS = -8.70 + 1.214P. The difference between the quantity demanded and supplied, QD-QS , is the amount of sugar imported that is restricted by the quota. If the quota is increased from 3 billion pounds to 6.5 billion pounds, then we will have QD - QS = 6.5 and we can solve for P: (26.53-.285P)-(-8.70+1.214P)=6.5 35.23-1.499P=6.5 P=19.2 cents per pound. At a price of 19.2 cents per pound QS = -8.70 + (1.214)(19.2) = 14.6 billion pounds and QD = QS + 6.5 = 21.1 billion pounds