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The market demand function for corn is Qd = 15 − 2P and the market supply function is Qs = 5P − 6, both quantities measured in billions of bushels per year.

(a) In the same graph, graph the demand curve, the supply curve, label the compet- itive equilibrium, the consumer surplus, and the producer surplus.

(b) What are the aggregate surplus, consumer surplus, and producer surplus at the competitive equilibrium?

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17 Dec 2019
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Related questions

The market demand function for corn is


Qd = 12 - 4P

The market supply function is

QS = 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?

$_______________.

The market demand function for corn is Qd = 20 - 2P

The market supply function is Qs = 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 Qd = 20 - 2P

The market supply function is Qs = 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

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