Supply and Demand Quantity Restriction

Requires a Wolfram Notebook System

Interact on desktop, mobile and cloud with the free Wolfram CDF Player or other Wolfram Language products.

Requires a Wolfram Notebook System

Edit on desktop, mobile and cloud with any Wolfram Language product.

A quantity restriction is a form of government intervention in a market that limits the production and sale of goods to some fixed amount . When you introduce the quantity restriction, this model will show the amount of and the new market price. Consumer and producer surplus respond accordingly, and deadweight loss increases.

Contributed by: Nicholas Palmer (October 2014)
Open content licensed under CC BY-NC-SA


Snapshots


Details

The area highlighted as deadweight loss illustrates the loss in consumer and producer surplus of this market due to the quantity restriction. This loss comes from transactions that can no longer occur with the quantity restriction. Notice from the example output that as the quota decreases and grows farther from the equilibrium quantity, both the price of the good and deadweight loss increase. This increase in deadweight loss illustrates the inefficiency that comes from this form of government intervention. It follows that as the quota becomes more severe, the market becomes more inefficient.



Feedback (field required)
Email (field required) Name
Occupation Organization
Note: Your message & contact information may be shared with the author of any specific Demonstration for which you give feedback.
Send