Answered: 10 Supply 6 5 Demand 2 0 4 8 12 16 20…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The U.S. government provides subsidies for a variety of agricultural products. Suppose the demand for and supply of corn is as indicated in the accompanying graph. (is on the picture)

a. In the absence of government involvement in the market, the equilibrium price is _______________ per bushel, and the equilibrium quantity is ________billion bushels. (completed)

b. Suppose the government provides a $2 per unit subsidy for suppliers of corn. In the graph, shift one or both curves to show the effect of the subsidy. (graph)

c. As a result of the subsidy, consumers will pay___________ per bushel, and sellers will receive ________ per bushel. (completed)

10
Supply
6
5
Demand
2
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60
Quantity of corn (billions of bushels)

Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

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