The Demand and Supply of Pickles Are Given by Q^D

question 40

Multiple Choice

The demand and supply of pickles are given by Q^D = 300 - 500P and Q^S = 400P - 150, where P is the price per pickle and Q measures the quantity of pickles in millions. Suppose the government creates a subsidy of $0.25 per pickle. Which of the following statements are TRUE?
I. Without the subsidy, the equilibrium quantity of pickles is 75 million.
II. With the subsidy, consumers pay 38.9 cents per pickle.
III. With the subsidy, producers receive 75 cents per pickle.
IV. With the subsidy, the equilibrium quantity of pickles is greater than 100 million.

• A) II, III, and IV
• B) I and III
• C) II and IV
• D) I, III, and IV

---

Definitions:

Dominate an Industry

To be the most influential or powerful entity within a particular market or sector, often through superior products, market share, or innovative strategies.

Multinational Corporations

Large corporations that operate and provide goods or services in multiple countries, often having significant economic, political, and cultural influence.

Low-Wage Countries

Nations with a general level of income that is much lower than the global average, often associated with high levels of poverty.

Neoclassical Economists

Economists who follow the neoclassical school of thought, focusing on supply and demand as drivers of price, output, and allocation of resources in markets.