Problem
1. Draw a graph illustrating the impact of imposing a quota on production in a market, where the quota is less than the current equilibrium quantity. What happens to the price of the good, producer surplus, and consumer surplus? Show the deadweight loss from the quota.
2. For decades, the mob ran a "numbers game" in which participants who matched three numbers chosen at random would win a prize. In the 1970s, state governments began authorizing state lottery commissions; those commissions typically offered games similar in structure to the numbers game. Using supply and demand analysis:
a. Predict the effect of the creation of state lotteries on the number of people playing numbers-type games.
b. Predict the effect of the creation of state lotteries on the number of people playing mobrun numbers games.
c. Predict the effect of the creation of state lotteries on the price of playing a numbers-type game.
d. Numbers games are unusual in that tickets don't typically vary in their nominal price?-?most tickets sell for exactly $1. Given that the nominal price is fixed, how might the price change you indicated in (c) be achieved?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.