Use the following to answer questions 35-36:
Figure 3.12
-(Figure 3.12) The quota causes consumer surplus to:
A) increase from $8 to $16.
B) decrease from $8 to $2.
C) decrease from $16 to $12.
D) decrease from $12 to $4.

Question

Use the following to answer questions 35-36:
Figure 3.12 
-(Figure 3.12) The quota causes consumer surplus to:
A) increase from $8 to $16. 
B) decrease from $8 to $2. 
C) decrease from $16 to $12. 
D) decrease from $12 to $4.

Quizplus · Accepted Answer

The quota reduces the supply of the good, causing the equilibrium price to increase from $8 to $10. However, consumers are only willing to pay up to $8 for the good, so the consumer surplus decreases from $8 to $2.

Use the Following to Answer Questions 35-36