Suppose the demand for wheat, in millions of bushels, can be expressed as Q = 100 - 10P and the supply can be expressed as Q = 10P. If government sets a production price floor guaranteeing farmers a price of $5.50 but does not impose production quotas, how much taxpayer funds must be use to purchase surplus production of wheat the higher price encourages?

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    No taxpayer funds are used. The surplus will cause the price to fall, increasing quantity demanded until the market clears.
     $50 million
     $45 million
     $55 million
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

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$55 million
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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