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,economic surplus is represented by
A)areas 1,2 and 5.
B)areas 3 and 4.
C)areas 1,2 and 3.
D)areas 1,2,3,4,5,6 and 7.
E)areas 2,3,5 and 6.

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,economic surplus is represented by
A)areas 1,2 and 5. 
B)areas 3 and 4. 
C)areas 1,2 and 3. 
D)areas 1,2,3,4,5,6 and 7. 
E)areas 2,3,5 and 6.

Quizplus · Accepted Answer

After the imposition of a quota, economic surplus is the sum of consumer surplus and producer surplus, which is represented by areas 1, 2, and 3.

The Diagram Below Shows the Market for Litres of Milk