The market demand function for corn is

Q^d = 12 - 4P

The market supply function is

Q^S = 6P - 7

both quantities measured in billions of bushels per year.

Instructions: Round all quantities to the nearest whole number and prices to 2 decimal places.

a. What is consumer surplus at the competitive market equilibrium?

$.

b. What is producer surplus at the competitive market equilibrium?

$.

c. What is aggregate surplus at this equilibrium?

$_____.

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Related questions

The market demand function for corn is Q^d = 20 - 2P

The market supply function is Q^s = 5P - 1

both measured in billions of bushels per year. The initial equilibrium price is $3.00, and the initial equilibrium quantity is 14 billion bushels. Consumer surplus is $49.00, producer surplus is $19.60, and aggregate surplus is $68.60. Suppose the government wants to raise the price of corn to $3.50. What are the welfare effects of a price floor, price support, production quota, and voluntary production reduction program?

Instructions: Round quantities to 1 decimal place and prices to 2 decimal places. State the cost to government in absolute value. Fill in the blank for each of the Program below.

Program 1: A price floor

	Amount ($)
Consumer surplus	_____ billion
Producer surplus	_____ billion
Cost to the government	_____ billion
Aggregate surplus	_____ billion
Deadweight loss	_____ billion

Program 2: A price support

	Amount ($)
Consumer surplus	_____ billion
Producer surplus	_____ billion
Cost to the government	_____ billion
Aggregate surplus	_____ billion
Deadweight loss	_____ billion

Program 3: A production quota

	Amount ($)
Consumer surplus	_____ billion
Producer surplus	_____ billion
Cost to the government	_____ billion
Aggregate surplus	_____ billion
Deadweight loss	_____ billion

Program 4: A voluntary production reduction program

	Amount ($)
Consumer surplus	_____ billion
Producer surplus	_____ billion
Cost to the government	_____ billion
Aggregate surplus	_____ billion
Deadweight loss	_____ billion

The market demand function for corn is Q^d = 20 - 2P

The market supply function is Q^s = 5P - 1

Program 1: A price floor

	Amount ($)
Consumer surplus	_____ billion
Producer surplus	_____ billion
Cost to the government	_____ billion
Aggregate surplus	_____ billion
Deadweight loss	_____ billion

Program 2: A price support

	Amount ($)
Consumer surplus	_____ billion
Producer surplus	_____ billion
Cost to the government	_____ billion
Aggregate surplus	_____ billion
Deadweight loss	_____ billion

Program 3: A production quota

	Amount ($)
Consumer surplus	_____ billion
Producer surplus	_____ billion
Cost to the government	_____ billion
Aggregate surplus	_____ billion
Deadweight loss	_____ billion

Program 4: A voluntary production reduction program

	Amount ($)
Consumer surplus	_____ billion
Producer surplus	_____ billion
Cost to the government	_____ billion
Aggregate surplus	_____ billion
Deadweight loss	_____ billion

The wheat market is perfectly competitive, and the market supply and demand curves are given by the following equations:

QD=20,000,000-4,000,000P

QS=7,000,000+2,500,000P, where QD and QS are quantity demanded and quantity supplied measured in bushels, and P=price per bushel.

a.) Determine consumer surplus at the equilibrium price and quantity.

b.) Assume that the government has imposed a price floor at $2.25 per bushel and agrees to buy any resulting excess supply. How many bushels of wheat will the government be forced to buy? Determine consumer surplus with the price floor.