Suppose that the market demand function for cows is Q = 1,000,000p-2, where Q is the number of cows per month and p is the price per cow. The market supply function is Q = p. a. What are the equilibrium price and quantity of cows? What is the consumer surplus, the producer surplus, and welfare? b. Now suppose that the government provides a subsidy of $100 per cow. What are the new equilibrium price and quantity, the consumer surplus, the producer surplus, and welfare? Round your answers to whole numbers.

Suppose that the market demand function for cows is Q = 1,000,000p-2, where Q is the number of cows per month and p is the price per cow. The market supply function is Q = p. a. What are the equilibrium price and quantity of cows? What is the consumer surplus, the producer surplus, and welfare? b. Now suppose that the government provides a subsidy of $100 per cow. What are the new equilibrium price and quantity, the consumer surplus, the producer surplus, and welfare? Round your answers to whole numbers.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter7: Market Efficiency And Welfare

Section: Chapter Questions

Problem 5P

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