Question

A binding output quota reduces consumer surplus to a greater extent when the demand curve is highly elastic. True False or Uncertain

Answer 1

A binding output quota reduces consumer surplus to a greater extent when the demand curve is highly inelastic, because in this case the demand curve is almost vertical and any change in possible quantity demanded will cause significant change in consumer surplus, but if the demand is inelastic, the change in consumer surplus will be lower.
So, the statement is False.