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In city Delicious, mango is growing in a small but perfectly competitive market. There are 15 identical growers and the representative cost function is C
In city Delicious, mango is growing in a small but perfectly competitive market. There are 15 identical growers and the representative cost function is C = 12.5 q 2 , where q is pounds of mangos produced. a. Write the equation for the market supply curve S(p). b. Suppose that the demand curve for mango is QD = 100 10p. Find the market clearing price and the quantity traded, as well as the quantity that each grower will produce. c. Compute the consumer surplus and producer surplus in the equilibrium calculated in part b). d. Now suppose the government provides a subsidy of $1 for each pound of mango to mango growers. Find the new equilibrium price and quantity traded. Compute the effects of this policy on consumer surplus, producer surplus and total welfare
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