Suppose That a Local Government Has Imposed a Quota of 0.5

question 110

Multiple Choice

Suppose that a local government has imposed a quota of 0.5 million gallons on water usage. Before the quota is enforced, the market demand curve is given by
Q^D = 10 - 2.25P
And the market supply curve is given by
Q^S = -10 + 2.75P
Where the quantity is measured in millions of gallons per month and the price is in dollars per thousand gallons. The deadweight loss as a result of the quota is ____.

• A) $1,000
• B) $500,000
• C) $1,500
• D) $1,605

---

Definitions:

Stereotypes

Oversimplified generalizations about groups of people that may or may not reflect reality.

Morning Person

An individual who feels more awake, alert, and productive during the morning hours compared to other times of the day.

Scapegoat Theory

The idea that blaming problems and misfortunes on outgroups contributes to negative attitudes toward these outgroups.

Confirmation Bias

The inclination to seek out, understand, prefer, and remember data in a manner that affirms an individual's existing notions or assumptions.