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Homework answers / question archive / Suppose the schedule below depicts the demand and supply for bushels of corn in Monroe County, Indiana in October, 1997

Suppose the schedule below depicts the demand and supply for bushels of corn in Monroe County, Indiana in October, 1997

Economics

Suppose the schedule below depicts the demand and supply for bushels of corn in Monroe County, Indiana in October, 1997. (15 Marks)

Price ($)

Quantity Demanded

Quantity Supplied

     

4

850

115

3.75

900

1100

3.50

950

1050

3.25

1000

1000

3.00

1050

950

2.75

1100

900

2.50

1150

850

  1. Now, instead of the above legislation in part (b), the government now decides to provide a subsidy of $0.50 per bushel to each farmer. What is the new equilibrium quantity of bushels of corn? How much do consumers pay for each bushel in this situation? How much do the farmers receive for each bushel in this situation?
  1. Under the subsidy in part (d), what is the total government expenditure for this subsidy program?

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