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Suppose that China is a small country of peanuts import, and the demand and supply of peanuts are as follows:

D=400-10P, S=50+5P，

The price of peanuts in the international market is set at USD 10. Please use figures and figures to illustrate the following problems:

(1) Under the free trade, China's peanuts production and import and export volume, the impact of free trade on domestic consumption and the welfare of manufacturers.

(2) China has imposed an quote limit of 200 units for peanuts import, the production and trade volume of domestic peanuts, and the welfare changes of consumers and manufacturers compared with free trade.

Sagot :

anthougo

1. a. Under free trade, China's peanuts domestic production will be 100 units (50 + 5 x 10).

b. Under free trade, China's peanuts import will be 200 units (300 - 100).

c. Under free trade, China's peanuts export will be negative 200 units (100 - 300).

d. Free trade ensures that domestic consumption is met because domestic manufacturers will produce 100 units while the remaining 200 units demanded by consumers will be met through imports.

2. a. With a quota limit of 200 units for peanuts import, peanuts production will still be 100 units (50 + 5 x 10).

b. Under the quota limit, China's peanuts import will be 200 units (300 - 100) since internal production is not more than 100 units.

c. Under the quota limit, China's peanuts export will be zero units.

d. The quota limit will still ensure that domestic consumption is met because the quota of 200 units plus 100 units of internal production will meet domestic demand for 300 units.

What are Free Trade and Quota?

Free trade implies the absence of any government-imposed limits on imports and exports.  On the other hand, quota refers to the trade restriction imposed by governments.

Data and Calculations:

D = 400 - 10P

S = 50 + 5P

Where:

D = Demand

S = Domestic Supply

P = Price

Price = $10

a. The quantity demanded will be 300 units (400 - 10 x  10).

b. The quantity supplied (domestically) will be 100 units (50 + 5 x 10).

c. The import quantity will be 200 units (300 - 100).

c. Quota imposed on imports of peanuts = 200 units

Thus, there will be no changes in the welfare of consumers and manufacturers under the quota limit compared with free trade because the quota meets domestic demand.

Learn more import and export quota systems and free trade here: https://brainly.com/question/14913943 and https://brainly.com/question/10608502

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