Economics 9708 · AS & A Level · 7.5

7.5 — practice question

The table indicates the costs of two milk producers. Producers receive a price of $12 per litre. Both firms have been allocated quotas that permit them to produce 200 litres per day. Firm Y asks firm X whether it may buy firm X’s quota. Assuming production costs remain constant and the costs of entering and leaving the market are zero, what is the minimum amount (per day) that firm X would agree to accept to sell its quota to firm Y?

  • A$400
  • B$600
  • C$1000
  • D$2400

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