Use the following to answer question:
-(Figure: The Shrimp Market)Use Figure: The Shrimp Market.If the government imposes a quota limiting sales of shrimp to 500 pounds,the quota rent per pound is:
A)$15.
B)$10.
C)$5.
D)The quota rent cannot be determined from the information provided.

Question

Use the following to answer question: 
-(Figure: The Shrimp Market)Use Figure: The Shrimp Market.If the government imposes a quota limiting sales of shrimp to 500 pounds,the quota rent per pound is:
A)$15. 
B)$10. 
C)$5. 
D)The quota rent cannot be determined from the information provided.

Quizplus · Accepted Answer

Quota rent per pound is the difference between the price after the quota is imposed and the price suppliers would have been willing to accept. In this case, with a quota of 500 pounds, the price rises to where demand is at 500 pounds, which is higher than the original equilibrium price. The difference between this new price and the original supply price at 500 pounds is the quota rent per pound. Based on the information typically provided in such a figure (not visible here but assuming standard supply and demand curves), if the price consumers are willing to pay for the 500th pound is $15 and suppliers would have been willing to supply it at $10, the quota rent per pound is $5.

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