Suppose That a Local Government Has Imposed a Quota of 0.5

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