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 is the change in consumer surplus (per million boxes) associated with the quota?

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 is the change in consumer surplus (per million boxes) associated with the quota?

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 is the change in consumer surplus (per million boxes) associated with the quota?

Suppose That the Market for Cigarettes Is Initially in Equilibrium