Consumers lose, but dairy farmers gain. They produce a smaller quantity but sell it for a higher price. And the higher price more than counters the smaller quantity because the demand for dairy products is inelastic. Recall that when demand is inelastic, the percentage decrease in quantity is smaller than the percentage rise in price and a rise in price brings an incease in total revenue. You can see that total revenue increases from $6 billion to $8 billion. (Do the math and calculate the elasticity of demand between prices of 10 cents and 20 cents.)

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Production Quota is Inefficient