救命~~~Econ問題--Quotas

1/The opportunity cost is not zero. The opportunity cost for Mr. Lee company to exercise free of charge quotas for exporting is the revenue from trading the free of charge quotas with market price.

2/ I am quite surprised to see that the question is asking the quality instead of quantity. Anyway, I will answer both quality and quantity for this case.

Assuming that the market price and quantity is at the market equilibrium before quotas is applied, and the quotas restriction is less than the market equilibrium quantity. Then the quantity of supply will decrease.

When USA applies quotas on Hong Kong exporting garments, the quantity supply decrease. Hong Kong garment trading firms will prefer trading high profit garment products to low profit ones. Logically, the higher profitability of the products, the higher its quality.

3a/ Supply curve will shift to the right. In a result, the market price equilibrium will goes down, while quantity supply remained unchanged.

3b/ When the garment product costs in USA goes down, the demand curve for Hong Kong garments will shift to the left. In a result, the price goes down, and the quantity remained unchanged, unless the new equilibrium quantity is less than the quotas restrictions.