Multiple Choice
The diagram below shows the market for litres of milk.
FIGURE 5- 8
-Refer to Figure 5- 8. Suppose that a binding output quota is imposed on this market at quantity Q1. The loss in economic surplus due to the quota is equal to
A) areas 5 and 6.
B) areas 2 and 5.
C) areas 5, 6 and 7.
D) areas 1, 2 and 3.
E) area 1.
Correct Answer:
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