The Equivalent Variation resulting from a quota is best defined as
A)the amount a consumer would pay to have the quota removed.
B)the amount the consumer would need to voluntarily accept the quota.
C)the amount a consumer would pay for the quantity specified by the quota.
D)the loss in utility resulting from the quota.

Question

Quizplus · Accepted Answer

The Equivalent Variation resulting from a quota is best defined as the amount a consumer would pay to have the quota removed. It represents the reduction in consumer surplus resulting from the quota, and measures the amount of money necessary to compensate consumers for the loss of welfare resulting from the quota. Therefore, the correct answer is A.

The Equivalent Variation Resulting from a Quota Is Best Defined