Multiple Choice
Suppose that the market for cigarettes is initially in equilibrium and is perfectly competitive. The demand curve can be expressed as ; the supply curve can be expressed as . 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.
Correct Answer:

Verified
Correct Answer:
Verified
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