Question
The market for apples is described by the graph below where P is the price of apples, Q is the quantity of apples, S is
The market for apples is described by the graph below where P is the price of apples, Q is the quantity of apples, S is the supply of apples, and D is the demand for apples. Suppose that the government promises farmers to pay them a total price of P1 per ton of apples but the government instructs the farmers in this market to sell as much of the apples as they can. Then, the government will pay a subsidy to the farmers equal to the difference between the price the government guaranteed and the price the apples actually sold for in the market. Given this program we know that the cost to the governmenta. Is equal to P1*(Q5 - Q2) and the total revenue received by farmers is equal to P1*(Q5).b. Is equal to (P1 - P4)*(Q5) and the total revenue received by farmers is equal to (P1 -P4)*(Q5).c. Is equal to (P1 - P4)*(Q5) and the total revenue received by farmers is equal to P1*(Q5).d. Is equal to (P1)(Q5 - Q2) and the total revenue received by farmers is equal to (P1 -P4)*(Q5).Please help me find answer step by step on how to get there
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