Determine a perfectly competitive market where market demand is given by Qd=30-P and market supply is given by Qs=2P. In this market, the government has imposed a production quota of 10.
1. Determine the consumer surplus under the quota?
2. What is the producer surplus under the quota by assuming the units are produced by the most efficient producers?
3. What is the deadweight loss associated with this production quota by assuming the units are produced by the most efficient producers.