Consider the market for any agricultural commodity for which there exists a binding output quota and demand is inelastic.One outcome of this situation is that
A)the price and quantity adjust back to the free-market equilibrium levels.
B)producers who were in this industry before the introduction of the quota are harmed.
C)producers leave this industry because total revenues fall as a result of the the quota.
D)it is difficult for new producers to enter this industry because the quotas are very expensive.
E)producers who enter this industry after the introduction of the quota benefit.

Question

Quizplus · Accepted Answer

Binding output quotas limit the quantity that can be produced, making it difficult for new producers to enter the industry due to the high cost of acquiring quotas.

Consider the Market for Any Agricultural Commodity for Which There