Suppose the demand for soybeans is ?(?) = 1100 − 20? and the supply for soybeans...

Suppose the demand for soybeans is ?(?) = 1100 − 20? and the supply for soybeans is ?(?) = 100 + 30?, where Q is billions of bushels of soybean per year and P is the price per bushel.

Now suppose that the government supports a price of $30 using a deficiency payment program. 1C: What quantity will producers supply to the market?

1E: What is the change in consumer surplus under this policy?

1F: What is the change in producer surplus under this policy?

1G: What is the change in welfare under this policy? Hint: you should find a negative number.

Expert Solution

Rahul Sunny answered 2 years ago

The following graph shows the domestic supply of and demand for soybeans in Zambia

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