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The Diagram Below Shows the Market for Litres of Milk

Question 101

Multiple Choice

The diagram below shows the market for litres of milk. The diagram below shows the market for litres of milk. FIGURE 5-8 -Refer to Figure 5-8.Suppose that a binding output quota is imposed on this market at quantity Q<sub>1</sub>.The loss in economic surplus due to the quota is equal to A) areas 5 and 6. B) areas 5,6 and 7. C) areas 2 and 5. D) area 1. E) areas 1,2 and 3. FIGURE 5-8
-Refer to Figure 5-8.Suppose that a binding output quota is imposed on this market at quantity Q1.The loss in economic surplus due to the quota is equal to


A) areas 5 and 6.
B) areas 5,6 and 7.
C) areas 2 and 5.
D) area 1.
E) areas 1,2 and 3.

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