The waters off the North Atlantic coast were once teeming with fish. But because of over fishing by the commercial fishing industry, the stocks of fish are seriously depleted. In 1991, the National Marine Fishery Service of the U.S. government implemented a quota to allow fish stocks to recover. The quota limited the amount of swordfish caught per year by all U.S.-licensed fishing boats to 7 million pounds. As soon as the U.S. fishing fleet had met the quota limit, the swordfish catch was closed down for the rest of the year. The accompanying table gives the hypothetical demand and supply schedules for swordfish caught in the United States per year.

Quantity of swordfish

(millions of pounds per year)

Price of swordfish

(per pound)

Quantity demanded Quantity supplied

$20 6 15 18 7 13 16 8 11 14 9 9 12 10 7

a. Use a diagram to show the effect of the quota on the market for swordfish in 1991. In your diagram, illustrate the deadweight loss from inefficiently low quantity.

b. How do you think fishermen will change how they fish in response to this policy?