2. The inverse demand curve for wheat is p = 10 – 0.10Q and the inverse...

2. The inverse demand curve for wheat is p = 10 – 0.10Q and the inverse supply curve is p = 0.40Q, where p = dollars per bushel and Q is billions of bushels of wheat. Wheat is bought and sold in a perfectly competitive market.

a. Provide a graph of the market for wheat and calculate and show the equilibrium price and quantity (in billions of bushels) in the market.

b. If the government provides a price support of $9 per bushel and buys up the excess wheat from farmers, show the effects of the price support on your graph and calculate the new quantity demanded and supplied.

c. Calculate and explain the effects of the price support on consumer surplus, producer surplus, government expenditures and welfare (deadweight loss) as a result of the price support.

please provide clear graph, math calculations and concise explanations as well. thank you so much

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Expert Solution

Rahul Sunny answered 1 year ago

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