Use the following to answer questions:
-(Table: Market for Fried Twinkies) Use Table: Market for Fried Twinkies. Suppose the government decides to reduce fried Twinkie consumption as part of a war on obesity. After careful study, the government decides to impose a quota of 5,000 on production of fried Twinkies this year. What price will producers charge if they obey the quota law?
A) $1.20
B) $1.30
C) $1.50
D) The answer cannot be determined with this information.

Question

Use the following to answer questions: 
-(Table: Market for Fried Twinkies) Use Table: Market for Fried Twinkies. Suppose the government decides to reduce fried Twinkie consumption as part of a war on obesity. After careful study, the government decides to impose a quota of 5,000 on production of fried Twinkies this year. What price will producers charge if they obey the quota law? 
A) $1.20 
B) $1.30 
C) $1.50 
D) The answer cannot be determined with this information.

Quizplus · Accepted Answer

From the table, we can see that the quantity demanded at a price of $1.50 is 5,000. Therefore, if producers are forced to reduce production to 5,000 (the quota), they will charge a price of $1.50 to clear the market.

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