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 producer surplus (per million boxes) associated with the quota?
A) $275.
B) $75.
C) $50.
D) $25.

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 producer surplus (per million boxes) associated with the quota?
A) $275. 
B) $75. 
C) $50. 
D) $25.

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 producer surplus (per million boxes) associated with the quota?
A) $275. 
B) $75. 
C) $50. 
D) $25.

Suppose That the Market for Cigarettes Is Initially in Equilibrium