Determine the market-clearing price of wheat for 1981: Find the market-clearing quantity How much would the government have had to buy to get the price from market clearing price to $3.70?

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter3: Demand And Supply
Section: Chapter Questions
Problem 41CTQ: We know that a change in the price of a product causes a movement along the demand curve. Suppose...
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Agricultural Economics

In 1981 the supply curve for wheat
was approximately as follows:
Price
• Supply: Qs = 1800 + 240P
where price is measured in nominal
dollars per bushel and quantities in
millions of bushels per year. The
demand curve for wheat was
Ps
• Demand: Q, = 3550 - 266P
A. Determine the market-clearing price
of wheat for 1981:
B. Find the market-clearing quantity
C. How much would the government
have had to buy to get the price from
market clearing price to $3.70?
D. What is the total cost to the
government of the price support
program.
E. What is the total change in welfare?
D+Q
Qo
Quantity
Transcribed Image Text:In 1981 the supply curve for wheat was approximately as follows: Price • Supply: Qs = 1800 + 240P where price is measured in nominal dollars per bushel and quantities in millions of bushels per year. The demand curve for wheat was Ps • Demand: Q, = 3550 - 266P A. Determine the market-clearing price of wheat for 1981: B. Find the market-clearing quantity C. How much would the government have had to buy to get the price from market clearing price to $3.70? D. What is the total cost to the government of the price support program. E. What is the total change in welfare? D+Q Qo Quantity
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