The market demand function for corn is Qd = 25 - 2P The market...

The market demand function for corn is

Q^d = 25 - 2P The market supply function is

Q^s = 5P -3

both measured in billions of bushels per year. What would be the welfare effects of a policy that put a cap of $3.50 per bushel on the price farmers can charge for corn? (Assume that corn is purchased by the consumers who place the highest value on it.)

Instructions: Round quantities to one decimal place. Round prices and surpluses to two decimal places.

	Amount ($)
New level of consumer surplus	billion ?
New level of producer surplus	billion ?
New level of aggregate surplus	billion
Deadweight loss	billion

Expert Solution

Colby Messinger answered 1 year ago

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