Module 9

Question 1

quota

Answer 1

quantity control

upper limit on what can be bought and sold

Question 2

license

Answer 2

method of imposing a quota

gives the owner the right to supply a good or service

Question 3

demand price

Answer 3

price at which consumers will demand that specific quantity

Question 4

supply price

Answer 4

price at which producers will supply that specific quantity

Question 5

wedge

Answer 5

difference between demand price and supply price of a good when a quota is imposed
price payed by buyers > price received by sellers

Question 6

quota rent

Answer 6

size of wedge at quota amount
the earnings that to the license holder from ownership of the right to sell the good
market price of license when licenses are traded

Question 7

deadweight loss

Answer 7

the lost gains associated with transactions that do not occur due to market interventions
area of triangle on supply demand quota graph
inefficient under use or over use of resources