Suppose that the government introduces a production quota for mushrooms and sets it at 2,000 pounds a
Question:
Suppose that the government introduces a production quota for mushrooms and sets it at 2,000 pounds a week. What is the market price of mushrooms? Calculate the producer surplus and the deadweight loss. Who gains and who loses?
Use the table, which shows the demand and supply schedules for mushrooms.
Transcribed Image Text:
Price (dollars per pound) 1.00 2.00 3.00 4.00 5.00 6.00 Quantity demanded Quantity supplied (pounds per week) 4,500 4,000 3,500 3,000 2,500 2,000 0 1,000 2,000 3,000 4,000 5,000
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