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Consider a perfectly competitive market where market demand is given by Qd=30-P and market supply is given by Qs=2P. In this market, the government has imposed a production quota of 10.

a)What is consumer surplus under the quota?
b) Assuming the units are produced by the most efficient producers, what is the producer surplus under the quota?
c) Assuming the units are produced by the most efficient producers, what is the deadweight loss associated with this production quota?
d) Now assume instead that the units are produced by the least efficient producers. What is the producer surplus in this case?  

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9694081

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