Suppose the market for semiconductors in the U.S. is characterized by: D = 200 – 40P [Demand]
S = 40 + 40P [Supply]
The market for semiconductors in the rest of the world is characterized by:
D = 160 – 40P [Demand] S = 80 + 40P [Supply]
Suppose the U.S. government imposes a quota of 32 units on its imports. Calculate the magnitude of the deadweight loss resulting from the quota under the assumption that the U.S. is a small open economy.