Quota. Determine the SWL. D: P = 840 - 3Q S: P = 240 + 3Q Quota: Q = 80.

Md Ariful Islam

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Md Ariful Islam

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D: P = 840 - 3Q S: P = 240 + 3Q In equilibrium quantity demanded equals quantity supplied at equilibrium price, so: 840 - 3Q = 240 + 3Q, 6Q = 600, Q = 100 units. P = 840 - 3*100 = $540. If there is a quota of Q = 80, then the price of demand is: P = 840 - 3*80 = $600, the price of supply is: P = 240 + 3*80 = $480. So, the deadweight loss is: DWL = 0.5*(600 - 480)*(100 - 80) = $1200.
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