Equilibrium with a Supply Quota (+)

Market willingness to pay is WTP = 1000 - 5*Q
There are two suppliers
Supplier 1 has WTA1 = 5*Q1
Supplier 2 has WTA2 = 100
Supplier 2 is subject to a quota and Q2 may not be more than 40

Determine the market equilibrium price.

Answer

Determine the effect on consumer surplus and the producer surplus for domestic firms (relative to having no quota).

Answer

Determine the effect on producer surplus for foreign firms and the deadweight loss (relative to no quota).

Answer

Graphs of the market and surpluses