In order to benefit US sugar beet and sugar cane producers, the US limits imports of foreign sugar (sucrose) under a quota program.  (Even though there aren’t that many US sugar producers, they are wealthy enough to fund a very powerful lobby in Congress.)   Suppose the import quota is restricted to 1 million tons per year, US production is 7 million tons per year, and US consumption is 8 million tons per year.  The world price about 6.5 cents/pound ($130/ton), while the US price is 22 cents/pound ($440/ton).  [1 ton = 2,000 lbs.]

Print off a copy of the graph below.
S(us) represent the US producers’ supply schedule.   S(world) is the world supply (assumed to be perfectly elastic).   D(us) is US demand for sugar.
Identify and calculate (in $) the following:

1. The loss of consumer surplus due to the quota
2. The excess profits accruing to foreign producers lucky enough to get a share of the US quota
3. The extra producer surplus accruing to US sugar producers
4. The deadweight loss from the US sugar quota

Explain the effects of US sugar policies on...

1. US candy manufacturers
2. R&D in the artificial sweeteners industry
3. the market for US corn (fructose)
4. European Union sugar policies
5. small sugar-producing LDC’s such as Belize and the Dominican Republic.
6. other sugar producers such as Brazil, Colombia and Peru.

What are some other indirect effects of the US’s sugar import quota program?