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AP Economics

AP Economics. Mr. Bernstein Module 9 : Quantity Controls October x, 2013. AP Economics Mr. Bernstein. Quantity Controls Another example of Government Intervention in markets Quotas ( ie fishing limits) Limits ( ie sugar imports into US) Licenses ( ie taxi medallions).

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AP Economics

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  1. AP Economics Mr. Bernstein Module 9: Quantity Controls October x, 2013

  2. AP EconomicsMr. Bernstein Quantity Controls • Another example of Government Intervention in markets • Quotas (ie fishing limits) • Limits (ie sugar imports into US) • Licenses (ie taxi medallions)

  3. AP EconomicsMr. Bernstein The Anatomy of Quantity Controls • Quotas drive a wedge between Pd and Ps (price at which consumers will demand that quantity and price at which suppliers will supply that quantity)

  4. AP EconomicsMr. Bernstein The Anatomy of Quantity Controls • Quota rent is the difference between Pd and Ps • = market price of a license • Notice Quota graph is just the Ceiling/Floor problem turned sideways…

  5. AP EconomicsMr. Bernstein The Cost of Quantity Controls • Inefficiency – missed opportunities for equilibrium level exchanges • Incentive for illegal activities (ie salmon poaching above limits)

  6. AP EconomicsMr. Bernstein Defining Deadweight Costs: Quotas

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