Consider the Following Demand and Supply Schedules for Some Agricultural

question 30

Multiple Choice

Consider the following demand and supply schedules for some agricultural commodity. $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Price } & \begin{array} { l } \text { Quantity } \\\text { Supplied }\end{array} & \begin{array} { l } \text { Quantity } \\\text { Demanded }\end{array} \\\hline \$ 10 & 300 & 1100 \\\hline \$ 30 & 500 & 900 \\\hline \$ 50 & 700 & 700 \\\hline \$ 70 & 900 & 500 \\\hline \$ 90 & 1100 & 300 \\\hline \$ 110 & 1300 & 100 \\\hline\end{array}\\\text { TABLE 5- } 2\end{array}$$
-Refer to Table 5- 2. Consider the market- clearing equilibrium. If the government then imposes a production quota of 500 units, the price of this commodity will relative to the free- market equilibrium price.

• A) fall by $40
• B) fall by $20
• C) rise by $40
• D) remain unchanged
• E) rise by $20

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