Answer Happy

Consider the market for corn in the United States. We are going to examine changes in consumer and producer surplus in a competitive market when the market is not in equilibrium. Suppose the demand and supply functions for corn are as follows. QD = 100-14.5P Qs = 0 +5.5P Where Q is bushels of corn (in billions) and P is the market price per bushel. a) What are the equilibrium price and quantity? (show Excel calculations) b) Calculate consumer, producer, and total surplus at both $3 and equilibrium price. What happens to consumer, producer, and total surplus as you increase the price from $3 to the equilibrium price? How much is the deadweight loss at $3? (show Excel calculations) c) Calculate consumer, producer, and total surplus at $6. What happens to the market quantity, consumer, producer, and total surplus as you increase the price to a level higher than the equilibrium price? How much is the deadweight loss at $6? (show Excel calculations) d) Does this support our class discussion of overproduction, underproduction, and the efficient market quantity? Explain why or why not?