A maximum quantity (quota) is a government imposed restriction on the maximum quantity or amount of a good that suppliers can provide in the market.
A minimum quantity (quota) is a government imposed restriction on the minimum quantity or amount of a good which suppliers must provide in the market.
Inputs
If the market for a particular good can be represented by the supply and demand functions,
Qs = C + Dp and Qd = A – Bp
(see perfect competition, linear equilibrium for more information),
and you know the quota (quantity restriction) imposed by the government for the good being sold in the market, you can calculate and determine the effects on consumer and producer surplus, as well as societies welfare in general, as a result of a quota being enforced.
For example if the market for bluetooth speakers is represented by the supply and demand functions,
Qs = 30000+100p and Qd = 370000 - 875p
and a quota for a maximum quanity of 400 bluetooth speaker is , then the following would be inputted into the above calculator
A | 370000 |
B | 875 |
C | 30000 |
D | 100 |
Type of Quantity Restriction | Maximum Quantity |
Quota Amount | 400 |
References