Question

The "U.S. sugar quota" a. results in benefits to sugar producers that exceed the cost to consumers. b. generates government revenue. c. does not result in an efficiency loss. d. results in costs to consumers that exceed the benefits to sugar producers. e. results in net welfare benefits to the U.S. economy.

Answer 1

D. Results in costs to consumers that exceed the benefits to sugar producers

Step-by-step explanation:

The U.S Sugar Quota is designed to protect the income of industry producers of sugar.

The U.S Sugar Quota leads to Producer Surplus. The free world trade price in sugar is $.10 and U.S sugar price is $.20. They supply about 17 billion pounds of sugar and make a Producer Surplus.

Also, those that are allocated import quotas benefit from this program. They buy sugar at world price and sell at the U.S price.

Consumers pay for the costs.

Therefore, the U.S Sugar Quota results in costs to consumers that exceed the benefits to sugar producers.