these support policies have led to several attempts to economize. Moreover, the EU's support policies are always a hot item during international trade negotiations in the framework of the WTO. The support policies used by the EU differ from product to product. To keep things simple, consider a product which cannot be imported from or exported to non-member countries: fresh milk. Assume that there is a given number of n = 1,000 dairy farmers producing fresh milk in the EU. All these farmers have the following total cost function TC, measured in E per day, with q their milk production in liters per day: TC = 50 + 0.2q + 0.0001q2 (1) a) (4pt) Show that the EU's market supply curve for fresh milk (in liters per day) is given as follows, with P the price in & per liter: Qs = 5,000,000P - 1,000,000 (2) N.B.: Strictly speaking, this result only holds for prices high enough to cover average variable costs (the shutdown rule): we do not expect you to address this qualification here. The EU's market demand curve for fresh milk (in liters per day) is given by: Qd = 5,000,000 - 10,000,000P (3) b) (4pt) Show that, at the EU's market equilibrium, each farmer earns a profit of E50 per day I Now assume that the EU judges a daily profit income of only 650 as inhumanely low: instead, it believes that the dairy farmers are entitled to earn E175 a day. This purpose can a.o. be achieved with a liter of milk produced the Ell nave the