Which of the following statements is correct?
A)When a quota is placed on a market, the new price will be regulated by the government.
B)With a price regulation, the new price will be whatever buyers are willing to pay for the amount being sold.
C)When a tax is levied on a product, the new price that buyers pay will always be the old price plus the tax.
D)With a price regulation, the new price will be the regulated price, but with a quota, the new price will be whatever buyers are willing to pay for the limited quantity available.

Question

Quizplus · Accepted Answer

With a price regulation, the government sets the maximum or minimum price for a product, and the market will reach that price. However, with a quota, the government restricts the quantity of a product that can be sold in the market, which creates scarcity and leads to an increase in price as buyers are willing to pay more for the limited quantity available. Hence, the new price with a quota will be whatever buyers are willing to pay for the limited quantity available. The other statements are incorrect or incomplete.

Which of the Following Statements Is Correct