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AP Economics Mr. Bernstein Module 9: Quantity Controls October 2015.

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Presentation on theme: "AP Economics Mr. Bernstein Module 9: Quantity Controls October 2015."— Presentation transcript:

1 AP Economics Mr. Bernstein Module 9: Quantity Controls October 2015

2 AP Economics Mr. Bernstein Quantity Controls Another example of Government Intervention in markets Quotas (ie fishing limits) Limits (ie sugar imports into US) Licenses (ie taxi medallions) 2

3 AP Economics Mr. Bernstein The Anatomy of Quantity Controls Quotas drive a wedge between P d and P s (price at which consumers will demand that quantity and price at which suppliers will supply that quantity) 3

4 AP Economics Mr. Bernstein The Anatomy of Quantity Controls Quota rent is the difference between P d and P s = market price of a license Notice Quota graph is just the Ceiling/Floor problem turned sideways… 4

5 AP Economics Mr. Bernstein The Cost of Quantity Controls Inefficiency – missed opportunities for equilibrium level exchanges Incentive for illegal activities (ie salmon poaching above limits) 5

6 AP Economics Mr. Bernstein Defining Deadweight Costs: Quotas 6


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