The demand and supply of corn are as follows:
Qd = 2,100 - 125P
Qs = 600 + 175P,
where quantities are in millions of bushels and prices are in dollars per bushel.
(d) ALTERNATIVELY, assume that the government introduces a production quota of 1.35 billion bushels, i.e., Q = 1,350. Calculate:
(i) the change in the
(ii) the change in the
(iii) the
(e) ALTERNATIVELY, assume that the government gives producers FINANCIAL INCENTIVES to limit output to 1.35 billion bushels, i.e., Q = 1,350. Calculate:
(i) the change in the consumer surplus
(ii) the change in the producer surplus
(iii) the cost to the government
(iv) the deadweight loss
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