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The market demand function for corn is ad =15 -2P. The market supply function is 05 = 5P - 2.5, both measured in billions of
The market demand function for corn is ad =15 -2P. The market supply function is 05 = 5P - 2.5, both measured in billions of bushels per year. The initial equilibrium price is $2.5, and the initial equilibrium quantity is 10 billion bushels. Consumer surplus is $25.00, producer surplus is $10.00, and aggregate surplus is $35.00. Suppose the government gives corn farmers a subsidy of $1.33 per bushel of corn. What will be the effects on aggregate surplus, consumer surplus, and producer surplus? What will be the deadweight loss created by the subsidy? Instructions: Round your answers to 2 decimal places. Amount ($) New level of consumer surplus billion New level of producer surplus billion giszxnighniswadyw New level of aggregate surplus billion Deadweight loss billion
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