An effective production quota
A)is efficient because it results in overproduction.
B)is efficient because it results in underproduction.
C)is inefficient because it results in underproduction.
D)is inefficient because it results in overproduction.
E)is efficient for quantities below the equilibrium quantity and is inefficient for quantities above the equilibrium quantity.

Question

Quizplus · Accepted Answer

An effective production quota is inefficient because it results in underproduction, leading to a loss of potential gains from trade and a decrease in total surplus.

An Effective Production Quota