Suppose That the Market for Cigarettes Is Initially in Equilibrium $P = 60 - Q ^ { d }$

question 48

Multiple Choice

Suppose that the market for cigarettes is initially in equilibrium and is perfectly competitive. The demand curve can be expressed as $P = 60 - Q ^ { d }$ ; the supply curve can be expressed as $P =$ $0.5 Q ^ { s }$ . Quantity is expressed in millions of boxes per month. Now suppose that the federal government imposes a production quota on cigarettes of 30 million boxes per month. What is the change in producer surplus (per million boxes) associated with the quota?

• A) \(\$ 175\)
• B) \(\$ 75\)
• C) \(\$ 50\)
• D) \(\$ 25\)

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