Demand and Supply in the Wheat Market Are Given By

Essay

Demand and supply in the wheat market are given by:
Q_D = 2000 - 1000 P and Q_S = -500 + 1000 P
where Q is millions of bushels and P is price per bushel.
a.Find the equilibrium price and quantity.
b.Suppose that the government wishes to support farm income and thus sets a price floor of $1.50/bushel.Find the size of the farm surplus.
c.What is the cost of this program to the government?