Suppose that the market for cigarettes is initially in equilibrium and is perfectly competitive.The demand curve can be expressed as ; the supply curve can be expressed as Quantity is expressed in millions of boxes per month.Now suppose that the federal government imposes a production quota on cigarettes of 30 million boxes per month.What are the new amount traded and the price in this market?
A) Q = 40; P = 20
B) Q = 20; P = 40
C) Q = 30; P = 30
D) Q = 30; P = 15

Question

Suppose that the market for cigarettes is initially in equilibrium and is perfectly competitive.The demand curve can be expressed as  ; the supply curve can be expressed as  Quantity is expressed in millions of boxes per month.Now suppose that the federal government imposes a production quota on cigarettes of 30 million boxes per month.What are the new amount traded and the price in this market?
A) Q = 40; P = 20 
B) Q = 20; P = 40 
C) Q = 30; P = 30 
D) Q = 30; P = 15

Quizplus · Accepted Answer

The Answer of Suppose that the market for cigarettes is initially in equilibrium and is perfectly competitive.The demand curve can be expressed as  ; the supply curve can be expressed as  Quantity is expressed in millions of boxes per month.Now suppose that the federal government imposes a production quota on cigarettes of 30 million boxes per month.What are the new amount traded and the price in this market?
A) Q = 40; P = 20 
B) Q = 20; P = 40 
C) Q = 30; P = 30 
D) Q = 30; P = 15

Suppose That the Market for Cigarettes Is Initially in Equilibrium