Assume that the market for eggs is perfectly competitive. The diagram shows the demand and supply for eggs.

a. At the free-market equilibrium, p* and Q*, show what areas represent consumer and producer surplus.
b. Now suppose the egg producers organize them farmer€™s output is restricted by an amount to keep aggregate output at QQ, What happens to industry price?
c. In the quota of part (b), what areas now represent consumer and producer surplus? Is the outcome allocatively efficient? Explain.

Transcribed Image Text:

Quantity of Eggs