Quotas, such as limiting the amount of residential water use during a

Quotas, such as limiting the amount of residential water use during a drought, restricts an individual’s preference set and

A) reduces utility because an individual cannot consume as much as they would without the quota.
B) increases utility because quotas restrict output and raise profits for the water company.
C) reduces utility because an individual is forced to substitute to other goods.
D) does not affect overall utility.

ANSWER

A