When a Quota Is Imposed on a Market with a Negative

question 131

Multiple Choice

When a quota is imposed on a market with a negative externality, the market is:

• A)efficient, because consumption occurs at the efficient level.
• B)not efficient, because the net benefits individuals receive from the amount set by the quota are different.
• C)efficient, because the net benefits individuals receive from the amount set by the quota are equal.
• D)not efficient, because the marginal cost outweighs the marginal benefit for too many consumers.

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Definitions:

Quota

A fixed share or a target that has to be met, often used in the context of sales, production, or immigration.

Secretary of State

A high-ranking official in the government responsible for foreign affairs or domestic administrative matters, depending on the country.

Minor

A person under the legal age of adulthood, which varies by country but is commonly 18 years old, and therefore has restricted legal rights and responsibilities.

Voidable

A legal term describing a transaction or action that is valid until it is annulled or voided by one of the parties involved.