8. Suppose that the government introduces a production quota for mushrooms and sets it at 2,000 pounds a week. What is the market price of mushrooms? Calculate the producer surplus and the deadweight loss? Who gains and who loses?

 

Source: www.teleSURtv.net/english, November 27, 2015 Venezuelans organize to overcome food shortages The government of Venezuela controls the price of food and there are shortages of milk, rice, coffee, pasta, sugar, corn flour, and cooking oil.

Eggs have disappeared from store shelves. While people stand in line for milk, cheese and yogurt are abundant. People who buy milk at the low price either sell it for a profit or exchange it for food items that other families stand in line to buy.