Consider the Canadian market for barley.Suppose a marketing board sets a production quota which is below the equilibrium quantity.The quota will cause the price of barley to ________ and the total revenue earned by Canadian barley farmers to ________.

Question

Quizplus · Accepted Answer

When a production quota is set below the equilibrium quantity, the supply decreases, leading to a higher price. If demand is inelastic, the higher price results in higher total revenue for farmers because consumers are not very responsive to price changes and will continue to buy nearly the same quantity.

Consider the Canadian Market for Barley