Suppose the demand curve for wheat in America is given by the equation Q_d=100-10P, where Q is in million tons per year and P is in thousand dollars per ton of wheat.The supply curve is Q_s=20P-20.Suppose further that the government arranges for the wheat farmers to supply a total of 40million tons of wheat per year, and it pays a fixed procurement price 2,000 dollars per ton.The government then sells the wheat in the urban areas for 3,000 dollars a ton.

Under a "household responsibility" system intended to boost production and alleviate shortages of food, the wheat farmers still have to supply the earlier quota to the government for the same price, but now they are free to produce more than the quota, and they can sell the surplus in a free market.The government still resells the procured quota at 3,000 dollars a ton.

a) How much will the wheat farmers produce?What will be the free market price?

b) Is the new system economically efficient?If not, what is the deadweight loss?

c)What are the consumer surplus, producer surplus, and government revenue under the new scheme?Who wins and who loses compared to the original system?

Suppose the market for wheat is completely liberalized - the government does not procure anything, and all wheat bought and sold in a free market.

d)How much will be produced?What will be the market price?

e)Is that system economically efficient?If not, what is the deadweight loss?

f)What are the consumer surplus, producer surplus, and government revenue in the free market?Who wins and who loses compared to the original system in part a?

g)