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The equations below represent the closed Canadian market for milk, which we assume to be competitive. P is the price of each litre of milk
The equations below represent the closed Canadian market for milk, which we assume to be competitive. P is the price of each litre of milk measured in cents and Q is measured in units of thousands of litres of milk (Q = 1 means 1,000 litres}. Demand: P : 2004621) Supply: P = 40 + 4Q5 Suppose initially the market is perfectly competitive. Now suppose the Canadian government decides to set a production quota equal to 10,000 litres of milk produced {Q = 10]. Calculate the loss of market inefciency that arises when the production quota is introduced. Please quote your answer in cents. Don't forget to convert your answer to reect the units appropnate to this problem. . To receive full marks, you must illustrate a graph with areas clearly labeled with letters so the TA can follow your work and calculations. . Refer to the lettered-areas when you calculate the "new" and "original" scenario. For example, it the problem asks you to quantify the change in CS, you should derive ACS : CSmCSGH, instead ofjust identifying 0C8. . Only one numerical calculation is required for the
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