If there is a free market for renting quota, what is the maximum the quota should rent for per cwt? If a farmer with marginal production cost of $6 per cwt. owned quota, would it be more profitable for her/him to produce the sugar or to rent the quota to someone else? Please explain Pictured is of previous questions if needed but needing help with question 4 that is pictured.Not sure if this is necessary for the question but given is demand for sugar: Q= 20 - P Supply for sugar: Q = 2 + P quantities are in million hundredweight (cwt) and price is dollars per cwt. EditingVom with this file and can't save any new changes. Please save a copy to avoid losing your work.Save a Copyagricunurar policy?P = 9Q= 112. If the government establishes a support price for sugar of $12 per cwt. (hundredpounds) and is willing to buy up any surplus sugar at that price, indicate on yourgraph the quantity supplied, quantity demanded, and quantity purchased by the|government. If the units are million cwt., how much money is required for thegovernment purchases? Show this amount on your graph.The equilibrium price is $9 per cwt. If the government fixes the price at $12 thenthere will be an excess of supply of sugar over demand. This means that P =$12, the demand for sugar is 8 million cwt where the quantity supplied is 14million cwt. There is then an excess supply of 6 million cwt of sugar (14-8 6). Ifthe government purchases that excess supply at a price of $12 per cwt, it wouldrequite $72 million for government purchases (12 x 6 = 72). The shaded part ofthe rectangle in the graph are government purchases.3. The government decides that the sugar price support program is getting tooexpensive. It abandons the support-price program and instead assigns amarketing quota to each sugar producer. This quota gives the holder the right tosell sugar on the market and can be transferred to other producers. Altogetherthe quotas allocated to sugar growers add up to 9 million cwt. Please graph thisproblem, indicating clearly the market price and quantity4 If there is a free market for renting quota, what is the maximum the quota shouldrent for per cwt? If a farmer with marginal production costs of $6 per cwt. ownedquota, would it be more profitable for her/him to produce the sugar or to rent thequota to someone else? Please explain.O 罗ETIT!

Equate the demand and supply to obtain the equilibrium demand for sugar: Q= 20 - P Supply for sugar:…

Answered: If there is a free market for renting…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 4E

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If there is a free market for renting quota, what is the maximum the quota should rent for per cwt? If a farmer with marginal production cost of $6 per cwt. owned quota, would it be more profitable for her/him to produce the sugar or to rent the quota to someone else? Please explain

Pictured is of previous questions if needed but needing help with question 4 that is pictured.

Not sure if this is necessary for the question but given is

demand for sugar: Q= 20 - P
Supply for sugar: Q = 2 + P

quantities are in million hundredweight (cwt) and price is dollars per cwt.

Editing
Vo
m with this file and can't save any new changes. Please save a copy to avoid losing your work.
Save a Copy
agricunurar policy?
P = 9
Q= 11
2. If the government establishes a support price for sugar of $12 per cwt. (hundred
pounds) and is willing to buy up any surplus sugar at that price, indicate on your
graph the quantity supplied, quantity demanded, and quantity purchased by the|
government. If the units are million cwt., how much money is required for the
government purchases? Show this amount on your graph.
The equilibrium price is $9 per cwt. If the government fixes the price at $12 then
there will be an excess of supply of sugar over demand. This means that P =
$12, the demand for sugar is 8 million cwt where the quantity supplied is 14
million cwt. There is then an excess supply of 6 million cwt of sugar (14-8 6). If
the government purchases that excess supply at a price of $12 per cwt, it would
requite $72 million for government purchases (12 x 6 = 72). The shaded part of
the rectangle in the graph are government purchases.
3. The government decides that the sugar price support program is getting too
expensive. It abandons the support-price program and instead assigns a
marketing quota to each sugar producer. This quota gives the holder the right to
sell sugar on the market and can be transferred to other producers. Altogether
the quotas allocated to sugar growers add up to 9 million cwt. Please graph this
problem, indicating clearly the market price and quantity
4 If there is a free market for renting quota, what is the maximum the quota should
rent for per cwt? If a farmer with marginal production costs of $6 per cwt. owned
quota, would it be more profitable for her/him to produce the sugar or to rent the
quota to someone else? Please explain.
O 罗
ETIT!

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