The Supply and Demand Curves for Corn Are as Follows

question 142

Essay

The supply and demand curves for corn are as follows:
Q_D = 3,750 - 725P
Q_S = 920 + 690P,
where Q = millions of bushels and P = price per bushel.
a. Calculate the equilibrium price and quantity that would prevail in the free market.
b. The government has imposed a $2.50 per bushel support price. How much corn will the government be forced to purchase?
c. Calculate the loss in consumer surplus that would occur under the support program.

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Definitions:

Billing Electronically

The process of sending bills or invoices to customers through electronic means, such as email or online platforms, rather than paper mail.

Total Collection Time

The average duration it takes for a business to collect payments owed by its customers.

Zero-balance Account

A type of bank account that maintains a balance of zero by automatically transferring funds from a master account in an exact amount to cover checks presented.

As-needed Basis

A method or arrangement where resources are utilized or tasks are performed as and when required, rather than on a scheduled or continuous basis.