Which of the following is the most likely effect of a quota on wheat? A. The supply curve will shift downward. B. Marginal costs will be greater than marginal benefit. C. Nothing if the quota is set above the equilibrium quantity.
A quota does not cause the supply curve to shift. The equilibrium quantity will decrease to the quota amount. Marginal cost will be less than marginal benefit, leading to a deadweight loss from underproduction.
