(Table: the Market for Acupuncture) Look at the Table the Market

question 134

Essay

(Table: The Market for Acupuncture) Look at the table The Market for Acupuncture.In an effort to regulate this market, the town requires each acupuncture therapist to purchase a license.Initially the government issues only enough licenses to provide for 20 treatments per month.Suppose this quota is in place for many years and, over time, the population of the town has substantially grown.This change could result in:
A.larger quota rents and more deadweight loss as the demand curve shifted to the left.
B.larger quota rents and less deadweight loss as the supply curve shifted to the right.
C.larger quota rents and more deadweight loss as the demand curve shifted to the right.
D.smaller quota rents and more deadweight loss as the demand curve shifted to the right.

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Definitions:

Elastic Demand

A situation where the demand for a product or service significantly changes in response to a change in price, indicating consumers' sensitivity to price changes.

Inelastic Demand

A situation where the demand for a product or service remains relatively unchanged despite changes in its price.

Marginal Cost

The rise in aggregate expenditure resulting from the production of one more unit of a good or service.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded.