Explain more about Production Quotas, and say what is the difficulty to understand this concept.

Policy: Production Quotas - A production quota is a limit on either the number of producers in the market or on the amount that each producer can sell - The quota usually has a goal of placing a limit on the total quantity that producers can supply to the market Impact of a 4 Million Unit Production Quota $20 Consumer surplus Quota F Deadweight loss With No Quota With Quota Impact of Quota H S Consumer surplus A+B +F F -A- B $12 . . . . - . . K ($36 million) ($16 million) (-$20 million) Price (dollars per unit) A B Producer surplus C+E A+E A- C ($18 million) ($32 million) ($14 million) $8 G Net benefits 4 + B + C+E+F A+ E +F -B- C $6 E (consumer surplus + producer surplus) ($54 million) ($48 million) (-$6 million) K Producer Deadweight loss zero B + C ($6 million) B + C ($6 million) surplus $2 7 D 4 6 10 Quantity (millions of units per year)