To cut milk production, every producer is allocated a quota that restricts the quantity of milk each producer may produce. At first, these quotas are not tradable. What effect would allowing the producers to trade the quotas with one another have on the total amount of milk produced and on the combined profits of milk producers?
- Atotal volume increases; profits increase
- Btotal volume increases; profits decrease
- Ctotal volume unchanged; profits increase
- Dtotal volume unchanged; profits decrease