Use the following to answer question:
-(Table: Market for Fried Twinkies)Use Table: Market for Fried Twinkies.Suppose the government decides to reduce fried Twinkie consumption as part of a war on obesity.After careful study,the government decides to impose a quota of 5,000 on production of fried Twinkies this year.What price will producers charge if they obey the quota law?
A)$1.20
B)$1.30
C)$1.50
D)The answer cannot be determined with this information.

Question

Use the following to answer question: 
-(Table: Market for Fried Twinkies)Use Table: Market for Fried Twinkies.Suppose the government decides to reduce fried Twinkie consumption as part of a war on obesity.After careful study,the government decides to impose a quota of 5,000 on production of fried Twinkies this year.What price will producers charge if they obey the quota law? 
A)$1.20 
B)$1.30 
C)$1.50 
D)The answer cannot be determined with this information.

Quizplus · Accepted Answer

At a quantity of 5,000, the market price for fried Twinkies will be $1.50. This is because at this quantity, the demand for fried Twinkies exceeds the supply. Therefore, producers can charge a higher price to maximize their profits.

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