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The demand for potatoes is:Q = 20 - P The supply of potatoes is:Q=2 +P Quantities are in million hundredweight (cwt.) and price is dollars

The demand for potatoes is:Q = 20 - P

The supply of potatoes is:Q=2 +P

Quantities are in million hundredweight (cwt.) and price is dollars per cwt.

Assume there is a free market for renting quota, what is the max price per cwt the quota should rent for? If a farmer has marginal production costs of $6 per cwt. owned quota, would more profitable for him to produce the potatoes or to rent the quota to another person? Explain your answer.

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