-The above figure shows the demand and supply curves in the market for milk.If the government imposes a quota at 500 gallons,calculate the change in the consumer surplus.
A) △CS = -250
B) △CS = -150
C) △CS = -500
D) △CS = 200

Question

-The above figure shows the demand and supply curves in the market for milk.If the government imposes a quota at 500 gallons,calculate the change in the consumer surplus.
A) △CS = -250 
B) △CS = -150 
C) △CS = -500 
D) △CS = 200

Quizplus · Accepted Answer

The imposition of a quota reduces the quantity available in the market, leading to a higher price and a decrease in consumer surplus. The change in consumer surplus is calculated as the area of the triangle formed by the reduction in quantity and the increase in price, which is -250.

-The Above Figure Shows the Demand and Supply Curves in the Market