An effective production quota is
A)efficient because it results in overproduction.
B)efficient because it results in underproduction.
C)inefficient because it results in underproduction.
D)inefficient because it results in overproduction.
E)efficient for quantities below the equilibrium quantity and is inefficient for quantities above the equilibrium quantity.

Question

Quizplus · Accepted Answer

An effective production quota results in underproduction because it limits the amount of output that can be produced, which can lead to shortages and higher prices. Overproduction results when there is excess capacity, which is not typically the case with a production quota. Therefore, choices A, B, D, and E are incorrect.

An Effective Production Quota Is