Use the following to answer questions:
-(Table: Market for Banana Muffins)Use Table: Market for Banana Muffins.Suppose that the government decides to reduce banana muffin consumption as part of a war on obesity.After careful study,the government decides to impose a quota of 5 000 on production of banana muffins this year.What price will producers charge if they obey the quota law?
A) $1.20
B) $1.30
C) $1.50
D) The answer cannot be determined with this information.

Question

Use the following to answer questions: 
-(Table: Market for Banana Muffins)Use Table: Market for Banana Muffins.Suppose that the government decides to reduce banana muffin consumption as part of a war on obesity.After careful study,the government decides to impose a quota of 5 000 on production of banana muffins this year.What price will producers charge if they obey the quota law?
A) $1.20 
B) $1.30 
C) $1.50 
D) The answer cannot be determined with this information.

Quizplus · Accepted Answer

With a quota of 5,000, the quantity supplied will be reduced to 5,000, which is equal to the quantity demanded at a price of $1.50. Therefore, producers will charge the equilibrium price of $1.50.

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