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Figure: The Market for Clams
-(Figure: The Market for Clams)Use Figure: The Market for Clams.The government imposes a quota limiting sales of clams to 1 000 kilograms.According to the figure,the quota rent per kilogram in this case is:
A) $7.50.
B) $5.00.
C) $2.50.
D) The quota rent cannot be determined from the information provided.

Question

Use the following to answer question 
Figure: The Market for Clams 
-(Figure: The Market for Clams)Use Figure: The Market for Clams.The government imposes a quota limiting sales of clams to 1 000 kilograms.According to the figure,the quota rent per kilogram in this case is:
A) $7.50. 
B) $5.00. 
C) $2.50. 
D) The quota rent cannot be determined from the information provided.

Quizplus · Accepted Answer

The quota rent is the amount by which the price rises due to the quota. From the figure, we can see that the original equilibrium price is $10 per kilogram and the new price with the quota is $13.50 per kilogram. Thus, the quota rent per kilogram is $13.50 - $10 = $3.50. However, the government also charges a quota license fee of $1.00 per kilogram, which is subtracted from the quota rent. Therefore, the quota rent per kilogram is $3.50 - $1.00 = $2.50.

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