The diagram below shows the market for litres of milk.
FIGURE 5-8
-Refer to Figure 5-8.After the imposition of a milk quota at quantity Q1,the deadweight loss in this market is represented by
A)area 1.
B)areas 1 and 4.
C)areas 1,2,and 5.
D)areas 5 and 6.
E)areas 5,6,and 7.

Question

The diagram below shows the market for litres of milk.
  FIGURE 5-8
-Refer to Figure 5-8.After the imposition of a milk quota at quantity Q1,the deadweight loss in this market is represented by
A)area 1. 
B)areas 1 and 4. 
C)areas 1,2,and 5. 
D)areas 5 and 6. 
E)areas 5,6,and 7.

Quizplus · Accepted Answer

The deadweight loss is represented by the areas that are lost due to the quota, which are areas 5 and 6.

The Diagram Below Shows the Market for Litres of Milk