Suppose That a Local Government Has Imposed a Quota of 0.5

question 88

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. After the quota is imposed, the price becomes ____.

• A) $4.00
• B) $4.22
• C) $5.00
• D) $5.22

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Definitions:

Merit Pay

A salary increase awarded to employees based on their job performance, acting as a motivational tool by rewarding high performers.

Unit Performance

The measurement of the efficiency, effectiveness, and productivity of a specific department or operational unit within an organization.

Ownership Mentality

A mindset where employees view themselves as co-owners of the business, taking responsibility for its success and acting in its best interest.

Deferred Distribution Plans

Financial arrangements allowing employees to defer receipt of wages or benefits until a future date, often for tax advantages or retirement planning.